Boohoo records first ever sales drop in UK amid inflation concerns

Boohoo has recorded the first UK sales decline in its history as it continues to grapple with supply chain disruption, intense competition and shifting post-pandemic consumer trends.

The fast fashion giant blamed the decline on tough comparisons with last year, when people were spending more online during lockdowns.

In a trading update on Thursday, Boohoo reported a 1% fall in UK revenue and an 8% dip in overall sales in the first quarter.

The company said it had been expecting a slowdown of sales as consumers’ online shopping in lockdown fuelled previously strong comparatives.

However, it noted UK sales did improve month-on-month during this period and returned to net growth in May and it anticipated more improvement during the rest of the year.

The retailer stuck to its previously lowered guidance for the full year of “low single digit” revenue growth, which would be the smallest increase since its initial stock sale in 2014.

It has also predicted that profitability will be much lower than its historical average.

READ MORE: Boohoo agrees settlement in US class action over misleading customers on pricing

“It has been an undeniably rough ride for the fast fashion retailer over the past few months with the shares falling some 80% and short-sellers circling it,” Begbies Traynor partner Julie Palmer said.

“There aren’t too many surprises this morning, after boohoo warned that first quarter trading would be below expectations earlier this year, and it’s clear the squeeze to consumer spending, higher returns rates and enduring supply chain issues are still leaving their mark on the business.

“Boohoo will be hoping that its younger demographic of customer, those living in the family home, may be partly insulated from the rampant inflation in the economy and there is some evidence that summer wardrobes are starting to be rebuilt.

“But consumers can be fickle and the decision by Love Island to ditch fast fashion in favour of pre-loved items may make purchasing trendy suits and party dresses from boohoo less palatable than it was before.”

Hargreaves Lansdown equity analyst Sophie Lund-Yates added: “The very worst of the supply chain scandal is behind boohoo, but it seems one challenge is being traded for another.

“Very strong comparisons with last year make current trading look poor, as the world is no longer frantically ordering loungewear from the sofa, and when we do place an order, it’s a lot more likely to end up in the returns heap back at boohoo HQ.

“That doesn’t just hurt sales, but margins too, keeping a lid on full year profit potential.

“Fast fashion is also likely to come under fire as inflation bites. While the price point is more palatable for a boohoo dress, the very occasions it’s being bought for, like a big night out or holiday, are going to find themselves rubbed off calendars if current conditions persist.”

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1 Comment. Leave new

  • Is this further evidence that the bubble has finally burst on this sector of fashion retailing. With increases in energy, shipping / staff costs etc and even the packaging costing more, the model seems broken.

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