• Friday, June 21, 2024

Business

Boohoo’s net loss almost doubles

The retailer announced a loss after tax of £140.9 million

Mahmud Kamani

By: Pramod Thomas

FAST-FASHION retailer Boohoo, whose brands include Karen Millen and PrettyLittleThing, reported Wednesday (8) a near-doubling of annual net losses caused by high inflation and weak demand.

The online retailer announced a loss after tax of £140.9 million ($176m) in its financial year to the end of February.

That compared with a net loss of £75.6m in 2022/23, Boohoo said in a statement.

Chief executive John Lyttle said the group had experienced “difficult market conditions, caused by high levels of inflation and weakened consumer demand”.

Boohoo sales slid 17 per cent to around £1.5 billion year-on-year amid heavy competition from Chinese online retailer Shein and as consumers return to physical stores following the Covid pandemic.

“Boohoo’s full-year results were a painful read for investors,” noted Guy Lawson-Johns, equity analyst at Hargreaves Lansdown.

“Revenue declined at high double-digit rates across all regions, including… in the US, which is seen as the group’s pathway to major growth.”

Boohoo shares dropped 1.2 per cent to 34.81 pence in London afternoon trading.

AJ Bell investment director Russ Mould added that “the disposable nature of some of its products is at odds with a commitment to green issues, which appears to be particularly important to its core demographic of teenagers and young adults”.

The latest financial reports reveal that Boohoo, established in Manchester in 2006, reduced its workforce by more than 1,000 employees during the year, reported The Guardian.

This downsizing occurred as the company encountered an 11 per cent decline in its active customer base, who not only spent less but also visited the site less frequently.

Due to this underperformance, Boohoo was unable to fulfill its commitment of issuing 16 million shares to Pretty Little Thing shareholders, led by Umar Kamani, the son of Boohoo’s co-founder and chairman, Mahmud Kamani.

This share allocation, part of a 2020 agreement, was promised upon Boohoo’s stock price reaching 491p by March of this year.

Had this benchmark been met, Kamani and other investors in Pretty Little Thing stood to gain around £79m in stocks this year. Notably, this potential windfall coincided with Kamani’s lavish four-day wedding celebration on the French Riviera, featuring performances by Andrea Bocelli and Mariah Carey, the newspaper report added.

(with inputs from AFP)

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