// Allianz Trade has cut its cover for the Boohoo Group as the business warns on profits
// Adjusted pre-tax profit dropped 90% to just £6.2m in its half-year results
Credit insurer Allianz Trade has lowered its cover for Boohoo Group’s suppliers amid the fashion retailer‘s concerns about its recent falling profits and the tough trading environment, Drapers has reported.
Drapers said it understands the reduction will impact all Boohoo Group suppliers, but the exact amounts could vary.
The insurance firm’s decision was based on factors including waning consumer demand, macro-economic challenges and Boohoo’s trading performance.
Subscribe to Retail Gazette for free
Sign up here to get the latest news straight into your inbox each morning
One Boohoo supplier told Drapers that his insurance cover was first reduced eight months ago, and it will now be reduced again.
Boohoo 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.
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.
Click here to sign up to Retail Gazette‘s free daily email newsletter
