Boohoo shares were down 12.8% to 56.4p in early morning trading on Thursday, after the fast fashion group announced an 8% fall in group total revenue to £445.7 million in FY 2023 against £486.1 million in Q1 2023.
The company reported falling revenues across most regions, with the USA taking the most significant blow with a 26% drop year-on-year to £95 million compared to £131.9 million.
Boohoo’s UK sales dropped for the first time ever by 1% to £272.1 million from £274.6 million, alongside a 7% decline to £49.6 million against £54.4 million in the rest of Europe.
However, sales grew 15% to £29 million compared to £25.2 million in the rest of the word.
Boohoo revenue was up 75% on Q1 2020, with lockdown habits remaining entrenched as a driver for online sales.
“I am pleased with the progress we are making towards our strategic priorities, which is already having a meaningful impact operationally within the business,” said Boohoo CEO John Lyttle.
“We have seen promising signs from the Group’s sales performance in the UK, which has improved month-on-month in the period and we are looking ahead towards our key summer trading season as holidays ramp up and customers look to the latest fashion from across our brands.”
“Looking forward, we will continue to focus on optimising both our financial and operational performance to ensure the business is well placed to take advantage of future growth opportunities.”
The company reported a tightly controlled inventory over the term, with lower levels of stock compared to year end and improvements across inventory turn and supply chain flexibility.
Boohoo further commented that its overheads continued to be tightly managed despite significant inflation.
The fast fashion company has its work cut out for it as inflation soars to record-breaking heights, with the US at 8.6% CPI and the UK at 9% in May, placing customers on thinner margins as the cost of living continues to devour consumer savings.
The firm said it had made progress on key projects, including the automation of its Sheffield project scheduled to go live in HY2 and a lease for a new distribution centre in Elizabethtown, Pennsylvania signed to support international growth, projected to go live in mid-2023.
Boohoo confirmed its outlook for FY 2023 remained unchanged, with revenue growth expected in the low single-digits with a return to growth in Q2 and improved growth rates in HY2 2023.
The fast fashion brand estimated adjusted EBITDA margins between 4% to 7% in line with guidance, as a result of continued costs within its supply chain, offset to some level by the financial benefits of its strategic priorities and leveraging of overheads.
“The sales challenges are compounded by sky-high freight rates and raw material cost inflation. Boohoo is now faced with the challenge of increasing prices in a promotionally driven and highly competitive market,” said Third Bridge senior analyst Harry Barnick.
“Our experts say Boohoo will have to find creative ways to reduce costs. Improving purchasing costs through fabric consolidation and production locations are key to the success of this cost reduction strategy.”
“Shein could take market share from Boohoo in the UK market given its broad offer and attractive price position.”