Daily Management Review

UK’s Boohoo Predicts A Tough Year Ahead As Its Profits Dropping 28%


UK’s Boohoo Predicts A Tough Year Ahead As Its Profits Dropping 28%
Boohoo, a British online clothes retailer, announced a 28 per cent drop in yearly core earnings, owing to high freight and logistics cost inflation, and warned that pandemic-related external variables will continue to have an impact this year.
The company reported on Wednesday that adjusted profits before interest, tax, depreciation, and amortisation (EBITDA) for the year ended February 28 were 125 million pounds ($156 million), in line with forecast and down from 173.6 million pounds in 2020-21.
Revenue increased by 14 per cent to 1.98 billion pounds.
Boohoo, a retailer of clothing, shoes, accessories, and cosmetic goods geared at women aged 16 to 40, issued a profit warning in December, citing a rise in product return rates, delays in foreign deliveries, and higher inbound freight costs as reasons.
The company predicts "low-single digits" revenue percentage growth and an adjusted EBITDA margin of 4 per cent to 7 per cent in 2022-23, compared to 6.3 per cent in 2021-22, as it expects pandemic-related variables to continue to negatively impact costs within its supply chain.
It expects revenue growth to remain basically flat in the first half of 2022-23, as greater product returns rates result in lower net sales in the first quarter, with growth returning in the second quarter. In the second half of the year, performance is predicted to improve.
Boohoo said it would concentrate on retaining market share gains earned during the last two years.
Before passing on prices to consumers, it wants to maximise efficiencies in its operating model and mitigate where possible.
Analysts had predicted EBITDA of 136.4 million pounds for 2022-23 before Wednesday's announcement.