Boohoo has cut more than 1,000 jobs and dived into debt after its losses soared and sales slumped 13 percent amid heavy competition from the Chinese online seller Shein and the revival of the high street after the pandemic lockdowns.
The online fashion specialist, which owns Debenhams, Warehouse, Dorothy Perkins and Pretty Little Thing, said it had built up net debts of £95 million in the year to the end of February – down from almost £6 million of net cash a year before – after losses widened 76 percent to £160 million.
Its chief executive, John Lyttle, blamed the group’s problems on “difficult market conditions, caused by high levels of inflation and weakened consumer demand”, and said it planned to make savings of £125 million in the year ahead after putting more automation into its Sheffield warehouse, closing one in Daventry, and opening a new warehouse in the US.
The latest accounts show that Boohoo, which was founded in Manchester in 2006, had cut more than 1,000 jobs in the year as it faced an 11 percent drop in the number of active customers using its site, each of whom spent less and visited less often.
Boohoo’s share price fell more than 3 percent on Wednesday morning but is less than a tenth of its value three years ago, when it was riding high on a shift to online shopping during the coronavirus pandemic while high streets were affected by government lockdowns.
The poor performance meant the company did not give 16m shares to shareholders of Pretty Little Thing who are led by Umar Kamani, a son of the Boohoo co-founder and chair, Mahmud Kamani.
The 16.1 million share payment, promised under a 2020 deal, was only due if Boohoo’s share price hit 491p by March this year. If they had hit that level, Umar Kamani and his fellow Pretty Little Thing investors would have received about £79 million in stock this year, just ahead of his four-day wedding last weekend on the French Riviera involving performances from Andrea Bocelli and Mariah Carey.
The company said: “While trading conditions have remained challenging due to cost inflation, uncertain consumer demand and normalisation of the channel shift online, the group has a strong business model and clear strategy which it is focused on executing to unlock market share.”
Boohoo and other online sellers experienced a boom in demand during the pandemic, when many households turned to the internet to buy comfy clothing to work and rest at home while many high streets were shut down.
With high streets now reopened, and new competition from cut-price Chinese sellers Shein and Temu as well as secondhand marketplaces such as Vinted and Depop, once successful online fashion specialists have taken a hit.
Lyttle said: “The group is now well positioned to return to growth, and we are focused on ensuring that growth is both sustainable and profitable.”
Guy Lawson-Johns, an equity analyst at Hargreaves Lansdown, said: “Boohoo’s full-year results were a painful read for investors. Revenue declined at high double-digit rates across all regions, including 18 percent in the US, which is seen as the group’s pathway to major growth.
“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.”
By Sarah Butler
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