Model wearing Debenhams clothing
Downbeat results for the first half to August confirmed continued weak trading / Image source: Boohoo
  • Progress on costs and margin improvement
  • But sales remain weak
  • Full-year revenues to fall by as much as 17%

Shares in Boohoo (BOO:AIM) cheapened 7.5% to a five-year low of 29.2p after the online fast-fashion retailer downgraded its full-year 2024 sales and profit forecasts with cash-strapped consumers continuing to feel the cost-of-living squeeze.

The embattled owner of the namesake brand as well as PrettyLittleThing, Debenhams and Dorothy Perkins now expects year-to-February 2024 revenues to decline by 12% to 17%, having previously called for a flat to 5% decline.

Backed by Mike Ashley’s Frasers (FRAS), Boohoo also warned adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) will be between £58 million to £70 million, below the previously guided £69 million to £78 million range.


After benefiting from the lockdown-induced online shopping boom, Boohoo’s fortunes turned down due to the impact of the cost-of-living crisis on its youthful customer demographic, a headwind from the return to in-store shopping as well as increased competition and supply chain costs.

Downbeat results for the half to August confirmed continued weak trading, with revenues falling by a worse-than-expected 17% to £729.1 million, including a 10% decline in core brands such as boohoo, boohooMAN, PrettyLittleThing, Karen Millen and Debenhams.

Sharper declines were seen in non-core brands where Boohoo is focused on profitability and the retailer said active customer numbers in the last 12 months have decreased by 12% to 17 million reflecting the switch back to offline following the pandemic.

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However, gross margin strengthened by 90 basis points to 53.4% in the half, despite significant investments into reducing supply chain lead times and cutting prices for hard-pressed customers.

And adjusted EBITDA margin improved 30 basis points to a better-than-feared 4.3% thanks to cost deflation, automation benefits and strong inventory management, with Boohoo reporting a welcome 35% or £94 million year-on-year reduction in stock.


Shore Capital, which has a ‘buy’ rating on Boohoo, said the ‘recalibration’ in the retailer’s revenue expectations was influenced by ‘a slower than anticipated volume recovery and a continued focus on more profitable sales. However, the group remains confident about the efficacy of its “Back to growth” strategy, which involves disciplined investments across product, price, and proposition.’

Liberum Capital pointed out Boohoo is through the worst of the cost pressures, but warned ‘a weak consumer, normalisation of the balance between online and offline channels, and significant competition from Shein are making a return to sales growth difficult’.

Russ Mould, investment director at AJ Bell, said: ‘Revenue declines are looking markedly higher than previously forecast as the company faces a slower than anticipated recovery in volumes. A soggy summer may not have helped, though to its credit Boohoo does not blame the weather, and the wider pressures on consumer spending are another factor.

‘Another reason for the softer volumes tells a rather more encouraging story from a Boohoo perspective. The company is showing a greater level of discipline. It is focusing on more profitable sales and it is, combined with investments in its logistics and technology platform, hoping to futureproof a business which has faced criticism over the efficacy and ethics of its supply chain in the past.’

Mould added: ‘Boohoo’s efforts are reflected in an improved margin performance and, importantly, the company has been able to achieve a tangible reduction in inventory too as it looks to claw its way back to profitability.

‘The problem for Boohoo is if volumes continue to decline then none of this will matter too much. It has to hope that its core demographic has not, for financial and environmental reasons, lost interest in the sort of cheap, disposable fashion which is Boohoo’s calling card. Or, if it has, that Boohoo can adapt its offering accordingly.’

Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (James Crux) and the editor of the article (Steven Frazer) own shares in AJ Bell.


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Issue Date: 03 Oct 2023