Off the back of this, the fast fashion giant has lowered its annual revenue guidance, forecasting a drop of 12 to 17% in annual sales for the year ending 28 February, compared with its previous guidance of flat to 5%. It said this was due to a “slower volume recovery than previously anticipated” and continued targeting of more profitable sales within its labels.
WHO OWNS BOOHOO?
Boohoo was founded in the heart of Manchester’s textile district in 2006, by British billionaire Mahmud Kamani, who is now co-founder and executive chairman. What started as one brand, has grown extensively in the UK and internationally and the business now generates sales in excess of £1bn.
WHICH BRANDS ARE IN BOOHOO GROUP?
The fashion group now owns the brands: Boohoo, BoohooMAN, Karen Millen, Nasty Gal, PrettyLittleThing, Nasty Girl, Misspap, Coast, Warehouse, Oasis, Wallis, Dorothy Perkins, Debenhams, Burton.
In its latest results, it revealed UK sales were 19% lower for the first half, despite discounting to help drive value.
Revenues in core brands declined 10%, consistent with prior guidance for Group revenues to decline by 10% to 15%, with more significant declines in its labels following the decision taken to target more profitable sales, which contributed to improved Group profitability, the retailer said.
WHAT’S HAPPENING WITH BOOHOO?
In the last six months the Group said it has made substantial progress, delivering key operational and strategic projects and an improvement in adjusted EBITDA margin. This has included capturing supply chain deflation and lowering input prices, then reinvesting these savings to drive faster lead times and lower prices for customers.
In addition, it has been strengthening its test & repeat model with significantly improved lead times. Whilst committing to reducing average selling prices, down year-on-year in comparison to the UK clothing market which has seen price inflation of 8%. As well as increasing its mix of entry price point categories to reinforce value for customers.
It has invested in automated logistics in Sheffield which it said has delivered “record levels of productivity.” It has also launched a US distribution centre, upgrading its proposition to include next day & express delivery.
Boohoo Group brand, PrettyLittleThing
John Lyttle, Group CEO, said: “Over the first half we have made substantial progress across key projects and initiatives, including the launch of our US distribution centre. We have seen significant improvements in sourcing lead times and invested in pricing to reinforce our value credentials.
“We have identified more than £125 million of annualised cost savings that support our investment programme. 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 added.
In line with prior guidance, it said adjusted EBITDA margins for the full year is expected to be between 4% and 4.5% given the strong progress made on gross margin and cost control. Adjusted EBITDA is expected to be between £58 million to £70 million. Capital expenditure is expected to be approximately £75 million.
Stock is down £94 million / 35% year on year due to its leaner, lighter, faster inventory model. And it goes into the second half with a strong balance sheet and significant liquidity position of £290m to provide the necessary foundations.
The Group said its back to growth strategy will “unlock the significant growth opportunity required to get the business back on its feet”. And its confidence remains unchanged in rebuilding profitability over the medium term, generating a 6% to 8% adjusted EBITDA margin while getting back to growth through: continued investment in product, price and proposition, volume growth, international expansion, unlocking cost deflation; and cost control.
Boohoo Group’s results come off the back of Asos’ recent market update last week, which revealed a double-digit drop in sales as a weaker performance during the summer and dampened consumer demand dented revenues. Despite this, it made a profit, as like Boohoo it is focusing its efforts on profitability and is set for another profitable quarter.
Asos said it expects circa £300m of profit improvement and cost savings in line with its turnaround strategy, which will drive order profitability up more than 45% year-on-year.
As well as tougher market conditions, UK online fast fashion retailers are being hit by increased competition from the likes of Chinese fast fashion giant Shein, who is dominating the global fast fashion space and recently revealed it has made over £1bn sales in the UK market alone.
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Emily Seares
Emily Seares has over 15 years of experience as a journalist and editor, specialising in fashion, retail, luxury, and business transformation. She is regularly by-lined in national newspapers and magazines and has an extensive network of industry contacts. Emily has spoken at international conferences, provided live interviews as a fashion expert on the BBC, and delivered regular lectures at a prestigious British university. She has received recognition for her contributions to the industry and was honoured in British VOGUE's Powerlist Top 100.
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Sales plunge at Boohoo Group
Boohoo Group revealed sales plunged 17% to £729.1m for the 6 months to the end of August, as demand for cheap, fast fashion dampens.
Off the back of this, the fast fashion giant has lowered its annual revenue guidance, forecasting a drop of 12 to 17% in annual sales for the year ending 28 February, compared with its previous guidance of flat to 5%. It said this was due to a “slower volume recovery than previously anticipated” and continued targeting of more profitable sales within its labels.
WHO OWNS BOOHOO?
Boohoo was founded in the heart of Manchester’s textile district in 2006, by British billionaire Mahmud Kamani, who is now co-founder and executive chairman. What started as one brand, has grown extensively in the UK and internationally and the business now generates sales in excess of £1bn.
WHICH BRANDS ARE IN BOOHOO GROUP?
The fashion group now owns the brands: Boohoo, BoohooMAN, Karen Millen, Nasty Gal, PrettyLittleThing, Nasty Girl, Misspap, Coast, Warehouse, Oasis, Wallis, Dorothy Perkins, Debenhams, Burton.
In its latest results, it revealed UK sales were 19% lower for the first half, despite discounting to help drive value.
Revenues in core brands declined 10%, consistent with prior guidance for Group revenues to decline by 10% to 15%, with more significant declines in its labels following the decision taken to target more profitable sales, which contributed to improved Group profitability, the retailer said.
WHAT’S HAPPENING WITH BOOHOO?
In the last six months the Group said it has made substantial progress, delivering key operational and strategic projects and an improvement in adjusted EBITDA margin. This has included capturing supply chain deflation and lowering input prices, then reinvesting these savings to drive faster lead times and lower prices for customers.
In addition, it has been strengthening its test & repeat model with significantly improved lead times. Whilst committing to reducing average selling prices, down year-on-year in comparison to the UK clothing market which has seen price inflation of 8%. As well as increasing its mix of entry price point categories to reinforce value for customers.
It has invested in automated logistics in Sheffield which it said has delivered “record levels of productivity.” It has also launched a US distribution centre, upgrading its proposition to include next day & express delivery.
John Lyttle, Group CEO, said: “Over the first half we have made substantial progress across key projects and initiatives, including the launch of our US distribution centre. We have seen significant improvements in sourcing lead times and invested in pricing to reinforce our value credentials.
“We have identified more than £125 million of annualised cost savings that support our investment programme. 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 added.
In line with prior guidance, it said adjusted EBITDA margins for the full year is expected to be between 4% and 4.5% given the strong progress made on gross margin and cost control. Adjusted EBITDA is expected to be between £58 million to £70 million. Capital expenditure is expected to be approximately £75 million.
Stock is down £94 million / 35% year on year due to its leaner, lighter, faster inventory model. And it goes into the second half with a strong balance sheet and significant liquidity position of £290m to provide the necessary foundations.
The Group said its back to growth strategy will “unlock the significant growth opportunity required to get the business back on its feet”. And its confidence remains unchanged in rebuilding profitability over the medium term, generating a 6% to 8% adjusted EBITDA margin while getting back to growth through: continued investment in product, price and proposition, volume growth, international expansion, unlocking cost deflation; and cost control.
Boohoo Group’s results come off the back of Asos’ recent market update last week, which revealed a double-digit drop in sales as a weaker performance during the summer and dampened consumer demand dented revenues. Despite this, it made a profit, as like Boohoo it is focusing its efforts on profitability and is set for another profitable quarter.
Asos said it expects circa £300m of profit improvement and cost savings in line with its turnaround strategy, which will drive order profitability up more than 45% year-on-year.
As well as tougher market conditions, UK online fast fashion retailers are being hit by increased competition from the likes of Chinese fast fashion giant Shein, who is dominating the global fast fashion space and recently revealed it has made over £1bn sales in the UK market alone.
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Emily Seares
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