Boohoo warns of further sales decline as profits drop 90%

Boohoo has warned that its sales are likely to be hit over the remainder of the financial year due to increases in inflation-driven costs and lower sales than previously anticipated for the six months ended 31 August 2022 (H1).

Revenues are expected to continue to decline and adjusted EBITDA margins are likely to be between 3% and 5%, compared to the previous guidance of 4% and 7%.

The announcement comes as the online retailer’s pre-tax profits dropped 90% in H1 from £63.8m to £6.2m.

Revenues also dropped 10% year-on-year from £975.9m to £882.4m. UK revenues declined 4% which Boohoo said softened through the second quarter as inflationary pressures increased and consumer demand was impacted by cost of living pressures.

Additionally, profits declined 13% from £533.3m to £463.5m, and adjusted EBITDA decreased 58% to £35.5m, compared to £85.1m for the same period last year.

John Lyttle, Boohoo CEO, said: “Performance in the first half was impacted by a more challenging economic backdrop weighing on consumer demand. Over the last three years the group has seen significant gains in market share achieved across our brand portfolio, particularly in the UK.

“We have a clear plan in place to improve future profitability and financial performance through self-help via the delivery of key projects, which will stand us in good stead as macroeconomic headwinds ease. We remain confident in the long-term outlook.”