// Boohoo warns revenues are likely to be further affected during the golden quarter
// Adjusted pre-tax profit dropped 90% to just £6.2m in its half-year results
Boohoo has warned its sales are likely to be hit during the golden quarter after it posted a fall in its half-year profits.
The online fashion retailer reported a 10% drop in sales to £882.4 million in the six months to August 31 – and warned that it expects “a similar rate of revenue declines” during the festive period.
Boohoo said that “inflation-driven costs” and lower sales meant EBITDA margins for its full-year were now likely to come in between 3% and 5%, compared to the 4%-7% it previously guided.
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The warning came after Boohoo’s bottom line crashed during the first half of its fiscal year. It said adjusted pre-tax profit dropped 90% to just £6.2 million during the period.
Adjusted EBITDA was down 58% at £35.5 million, accounting for just 4% of revenue compared to 8.7% a year ago.
Gross margins dropped from 54.6% during the comparable six-month period a year ago to 52.5%.
Meanwhile, in Boohoo’s core UK market, sales were down 4%.
The retailer said sales were “softening” during the summer and “consumer demand appears to have been impacted by cost-of-living pressures”.
Despite this, Boohoo said gross sales before returns was up 4%, “reflecting underlying growth and ongoing improvements in average order frequency and spend per customer”.
Returns rates jumped “significantly” year-on-year and are now ahead of pre-pandemic levels.
Boohoo has £10 million of net debt, which would allow it to make “selective investments into strategic growth initiatives”.
“Performance in the first half was impacted by a more challenging economic backdrop weighing on consumer demand,” Boohoo CEO John Lyttle said.
“Over the last three years the group has seen significant gains in market share achieved across our brand portfolio, particularly in the UK where our price, product and proposition resonate strongly with customers.
“We remain confident in the long-term outlook, as we continue to offer customers unrivalled choice, inclusive ranges and great value pricing, giving them even more reasons to shop with us.”
Meanwhile, Boohoo founder Mahmud Kamani has lost £500 million after the fast fashion retailer’s stock became the most shorted in the UK.
Kamani has watched the valuation of his business shrink to just £60 million from a peak of over £570 million in 2020.
Boohoo’s market cap fell below £500 million this week, a drop of over 90% from its June 2020 high of over £5 billion.
