Boohoo, the online fashion giant, took a major hit as losses reached £91 million as shoppers were affected by an increase in the cost of living. Nevertheless, the company’s shares surged after leaders voiced their intent to enhance profitability during the new financial year and take steps to stop its declining sales.
The company announced that sales had declined 11% to £1.77 billion for the year ending February 28th, compared to the previous year. This was likely due to shoppers having to deal with higher electricity and food bills over the past year. In the UK, revenues were down 9% and overseas sales decreased 13% as delivery times were extended. On top of that, returns escalated above pre-pandemic levels for the first time.
Boohoo ended the year with a pre-tax loss of £90.7 million, compared to a profit of £7.8 million the year before. The group anticipates profitability to significantly improve during the current year due to cost efficiencies and cost deflation in the supply chain. Group chief executive officer John Lyttle stated: “We will deliver sustainable returns on these investments. We will continue to give our customers the latest trends, outstanding value and a great experience.”
David Reynolds, equity analyst at Davy, commented: “The revenue line remains fragile, but adjusted EBITDA, inventory and cash flow have been well managed. The strategic intent is clear, execution remains challenging.” Boohoo is optimistic that profitability will be improved and that they will be able to get back to double-digit revenue growth as they focus on their key priorities.
