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Boohoo profits dented in H1 despite ‘record’ sales

The group claimed that profitability was impacted by a number of ‘cost headwinds’ driven by short-term factors largely relating to the pandemic

Boohoo has welcomed “record” first-half sales of £976m in the six months ending 31 August 2021.

Despite this, profitability was slightly dented with adjusted EBITDA down by 5% to £85.1m. The group claimed that profitability was impacted by a number of “cost headwinds” driven by short-term factors largely relating to the pandemic and ongoing investment in its brands.

These costs included increased marketing investments in key markets and new acquisitions, two warehouse operational moves, returns rates normalising and materially higher shipping costs. In total, Covid-19-related distribution cost increases totalled approximately £26m in the period.

Looking ahead, higher short-term cost headwinds are expected to continue in H2, particularly alongside recent freight inflation in the supply chain and wage inflation within its distribution centres.

In light of this, adjusted EBITDA margins are now expected to be 9% to 9.5%, compared to 9.5% to 10% as previously guided.

Nonetheless, it also expects a full year sales growth of 20% to 25%, implying sales growth of 20% to 30% in the second half of the financial year.

John Lyttle, group CEO, said: “Looking back over the last 18 months the group has delivered an excellent operational and robust financial performance, and that is a testament to all who have helped deliver this.

“In the first half of this financial year, our teams have yet again delivered: integrating four new brands, launching two new warehouses and strengthening our infrastructure in a manner that will allow our multi-brand platform to scale as planned.”

He added: “We will continue to invest across our platform, people and technology as we look to further cement our position as a leader in global fashion ecommerce.”

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