Boohoo share price dives in early morning trading
Boohoo, the online fashion retailer, confirmed that it has doubled its market share in the UK and US since the beginning of the pandemic, although its profits dived despite robust investment.
Sales jumped by 20% to £975.9m over six months up to the end of August year-on-year, while profits before tax plunged 64% to £24.6m.
One of the reasons costs were down was increased shipping costs, which exceeded levels seen before the pandemic by £26m.
At the time of writing, the Boohoo share price is down by over 8%.
Additional checks at the border following Brexit saw the company’s profit margins fall from 57.8% to 53.6%, Boohoo said.
“Given Boohoo’s successful customer acquisition over the last 18 months, its revenues look set to continue to grow in the short term, buoyed by these customers buying more expensive products,” Harry Barnick, Senior Analyst at Third Bridge.
“However, investors will be playing close attention to the sustainability of growth in the UK as Boohoo noted Q2 results were impacted by higher returns and the reopening of physical retail.”
“Although Boohoo’s market share has doubled over the last two years, as we head into the all-important Christmas season, the UK market is hotting up, with Chinese competitor, Shein, presenting a real threat to Boohoo’s market share given its price point and broad offer.”