The firm said it was on the road to recovery despite reporting pre-tax losses of £159.9million for the year to February 29, against losses of £90.7million the previous year
Fast fashion giant Boohoo has reported a significant increase in its annual losses, with sales plummeting nearly 20% as it navigates through tough market conditions.
The company recorded pre-tax losses of £159.9million for the year ending February 29, a stark increase from £90.7million the previous year. Boohoo’s revenues fell by 17% to £1.5billion, which the company attributes to a strategic shift towards profitability amid challenging market dynamics.
Despite the downturn, Boohoo noted some positive trends in the performance of its key brandsboohoo, boohooMAN, PLT, Karen Millen, and Debenhams. The decline in sales measured by gross merchandise value (GMV) slowed from 9% in the first half of the year to 4% in the latter half.
Looking ahead, the group is optimistic about achieving GMV growth in the fiscal years 2024-25 and is on course to realise annual cost savings of £125million. Chief Executive John Lyttle said: “Despite difficult market conditions, caused by high levels of inflation and weakened consumer demand, we made continued progress in the year.”
“The group is now well positioned to return to growth, and we are focused on ensuring that growth is both sustainable and profitable.” The report also highlighted the broader impact of the economic environment on Boohoo’s customer engagement, with an 11% drop in active customers to 16 million, alongside decreases in average order values and frequency.
The ongoing cost-of-living crisis and competition from online rivals like Shein have compounded the challenges faced by Boohoo, affecting spending patterns among its customer base.
The fashion giant Boohoo has been under the spotlight again following a BBC Panorama expose earlier this year, which accused the company of mislabelling clothes made in South Asia as Made in the UK. Boohoo responded at the time, calling it an “isolated incident” and claiming it affected less than 1% of its clothing supply.
In a move announced in January, Boohoo decided to shut down its Leicester factory and shift operations, although it stated that this decision was not linked to the investigation. This isn’t the first time Boohoo has faced scrutiny; about three years ago, the company revamped its ethical practices following a scandal involving its supply chain and allegations concerning the pay and working conditions of factory staff.
Guy Lawson-Johns, an equity analyst at Hargreaves Lansdown, said: “For now, it remains a struggling company with a tarnished reputation, reflected in the group’s valuation, which has come down significantly over the last few years.”
“And with customer key performance indicators continuing to trend in the wrong direction, it doesn’t look like a miraculous recovery is around the corner.”
