boohoo Group PLC shares slumped on Thursday after the online retailer once again warned on inflation and high clothing return rates, though it left annual guidance unchanged.

boohoo shares were 13% lower at 56.49 pence each in London on Thursday morning.

In the three months to May 31, its first quarter, group revenue declined 8.3% to £445.7 million from £486.1 million a year earlier.

Lockdowns had boosted sales a year prior and boohoo noted the revenue decline for the current year was ‘in line with prior guidance’. Compared to three years earlier, so pre-pandemic, sales were up over 75%, the company explained.

On an annual basis, boohoo suffered a chunky 26% decline in US sales, while UK sales were down 1%.

‘We have seen promising signs from the group’s sales performance in the UK, which has improved month-on-month in the period and we are looking ahead towards our key summer trading season as holidays ramp up and customers look to the latest fashion from across our brands,’ said Chief Executive John Lyttle.

Gross margin in the period was 52.8%, down 220 basis points on a year before, but noted this ‘improved through the quarter’.

Looking ahead, it still expects revenue for the year to February 28, 2023 to grow in the ‘low-single digits’ range. Its adjusted earnings before interest, tax, depreciation and amortisation margin is expected between 4% to 7%. In financial 2022, the margin fell to 6.3% from 10.0% a year prior and 10.2% in the pre-lockdown financial 2020.

‘The group continues to be affected by pandemic-related and inflationary factors that negatively impact costs within its supply chain and international competitive proposition, offset to some extent by the financial benefits from our strategic priorities and leveraging of overheads,’ boohoo said.

boohoo added it has made progress with some of its key strategic aims. It has continued to source from ‘near-shore markets’, reducing its exposure to chunkier freight costs.

It has also ‘tightly controlled’ inventory and managed costs, the company added.

boohoo, a pandemic winner, has since faced normalising sales patterns as high street retailers reopen following the easing of Covid restrictions. In recent months, this has been compounded by inflationary pressures hitting disposable incomes.

The stock has tumbled 83% over the past 12 months, and has dropped 87% from an all-time high of 433.5p in June 2020. The stock now trades just above its 2014 IPO price of 50p.

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