// Boohoo issues profit warning after continued extended delivery times
// Boohoo blamed the “significantly higher returns rates” for affecting net sales
Boohoo has issued an unexpected profit warning after witnessing “significantly higher return rates” and continued extended delivery times.
For the three months to November 30, Boohoo said it expected EBITDA margin for the year to be 6%-7% or between £117 million to £139 million, compared to the previous 9% to 9.5% guidance.
Net sales growth is also expected to be down to 12% to 14% for the year, compared to previous guidance of 20% to 25%.
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Boohoo blamed the “significantly higher returns rates” for affecting net sales and margins in the UK, while the drop in customer demand and air freight problems have affected European and US sales respectively.
The online retailer said returns were 12.5 percentage points higher in the period than in the previous year, and seven percentage points higher than pre-pandemic levels due to the “exceptionally high dress mix”.
It expects to incur cash exceptionals of £33 million, compared to £22.5 million guidance.
For the period, Boohoo said net sales were up 10% to £506.2 million, while UK gross sales were up 58% on full year and 102% on full year 2022.
The company said it remained “highly confident about its future growth prospects” and capable of delivering £5 billion and normalised growth rates of 25% post-pandemic.
“The strong performance in our core UK market, across both our established and acquired brands, demonstrates the potential to capture and grow market share in key markets,” chief executive John Lyttle said.
“In international markets, our proposition continues to be significantly impacted by ongoing service disruption due to the pandemic, which, in addition to increased recent consumer uncertainty, has weighed on our performance.
“The group has gained significant market share during the pandemic. The current headwinds are short term and we expect them to soften when pandemic related disruption begins to ease.
“Looking ahead, we are encouraged by the strong performance in the UK, which clearly validates the Boohoo model.
“Our focus is now on improving the international proposition through continued investment in our global distribution network, capable of delivering in excess of £5 billion of net sales, to support future growth.”
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