The British clothing retailer Boohoo Group Plc felt the effects of the adverse conditions in the first half of the 2022/23 financial year. According to an interim report published on Wednesday, the fast fashion specialist suffered a significant drop in sales and slipped into the red. The company cited falling demand due to rising inflationary pressure and supply difficulties in international business as reasons.
In the months of March to August, the group’s net sales amounted to 882.5 million pounds sterling (986.1 million euros). It was thus ten percent below the corresponding level of the previous year. In Great Britain, sales fell by four percent, and in international business they even fell by 17 percent.
Higher freight and logistics expenses, weaker-than-expected demand and “high cost inflation due to the macroeconomic environment” as well as strategic investments had an additional impact on the result, the company said. Earnings before interest, taxes, depreciation and amortization (EBITDA) adjusted for special effects fell by 58 percent to 35.5 million pounds sterling compared to the same period of the previous year.
The bottom line was a reported net loss of £14.7m (€16.4m) after the group posted a £17.8m surplus in the first half of last year. Adjusted for one-off factors, net income fell 92 percent to £3.8 million.
Management was cautious about the prospects for the remainder of the current financial year. The company announced that if the adverse conditions persist, a drop in sales at the level of the first half of the year can be expected. At the same time, it lowered its earnings forecast. An EBITDA margin adjusted for special effects in the range of three to five percent is now expected. The target corridor had previously been between four and seven percent.
The group announced that it would continue to press ahead with the reform measures it had already introduced in procurement, inventory management and the control of fixed costs. “The Board of Directors believes that the short-term focus on streamlining operations will position the group well to improve profitability and financial results going forward,” it said in a statement.