BOOHOO Group reported a 17 per cent decline in its revenue at £729.1 million for the six months to August as the fast fashion retailer warned that sales will fall by more than expected this year.
Its gross profit dived 16 per cent to £389.2m from £463.5m during the corresponding period last year amid stiff competition from its Chinese rival Shein.
Boohoo’s net debt rose to £35m from 24.6m as sales shrank after a boom online retailers enjoyed during the pandemic.
The company, co-founded by British Asian entrepreneur Mahmud Kamani, also reported a 10 per cent drop in the sales of its core brands including Pretty Little Thing, Karen Millen and Debenhams in line with prior guidance.
Its gross margin increased by just 0.9 per cent to 53.4 per cent, “despite significant reinvestment of supply chain and input cost deflation into lead times and lower prices for customers”, the Manchester-based company said on Tuesday (3).
GlobalData’s research associate Louise Déglise-Favre attributed Boohoo’s struggles largely to the rise of Shein which “continues to steal market share.”
“Shein is more agile than Boohoo and offers unbeatable low prices while keeping up with the endless stream of new micro-trends appearing on social media,” she told the Guardian.
Boohoo CEO John Lyttle revealed the group’s intention to cut costs by £125m to support its investment.
“Our confidence in the medium-term prospects for the Group remains unchanged as we execute on our key priorities where we see a clear path to improved profitability and getting back to growth,” he said.