Boohoo shares are down 18% year-to-date after releasing a string of disappointing results and trading updates through 2023.
In their most recent interim results from the six months to 31 August 2023, Boohoo said group revenue fell 17% and lost £9.1m in the period.
The poor performance reflects a tough microenvironment but also internal struggles at Boohoo.
Boohoo saw revenue decline across all geographical segments in the first half. The UK was the worst hit, with sales dropping 19%, and investors would have been upset to see US revenue fall 11%.
“Boohoo, the party’s on hold for now – the online fashion retailer enjoyed a spectacular run between its IPO in 2014 and 2021, becoming the epitome of fast fashion. But since then, the celebrations have been muted and performance has been lacklustre, to say the least,” said Aarin Chiekrie, equity analyst at Hargreaves Lansdown, shortly after Boohoo reported in early October.
Many have used savings to fund holidays and other discretionary spending, including new clothes, during the cost of living crisis. This cannot last forever.
Boohoo had previously blamed poor performance on supply chain issues, yet these have receded, and Boohoo continues to see deterioration across the business.
“A lot of the issues which are outside of the group’s control have eased though – supply chains are unclogging, shipping costs have sunk back to normal levels, and overall cost inflation has slowed. Yet despite these tailwinds, boohoo turned loss-making in the first half, highlighting the sticky position the group finds itself in,” said Chiekrie.
With interest rates set to remain higher for a prolonged period, the macro picture will give Boohoo no quarter throughout the winter. In addition, the unseasonably warm weather through October will have dampened demand.
Challenging external conditions are unlikely to afford Boohoo management the fruits of improvements to internal systems, including distribution and pricing.
The culmination of these factors will likely see Boohoo shares fall beneath 30p over the winter.