Boohoo’s sales declined more than expected in the last six months due to targeting more profitable business, the online fashion retailer said on Tuesday.
Revenues fell 17% in the six months to August and the company made sweeping downward revisions to their full-year projections.
The company now expects full-year sales to drop 12% to 17%, down from previous guidance of a 10% to 15% decline.
Boohoo shares were down around 9% after releasing their interim results on Thursday.
Boohoo said it successfully targeted more profitable sales in its budget labels, leading to steeper revenue drops there. Sales at its core brands fell 10%, in line with expectations.
The strategy boosted profitability, with adjusted EBITDA margin up 30 basis points to 4.3%. Boohoo reiterated guidance for full-year margins of 4% to 4.5%.
“The group’s focus remains on executing its back to growth strategy through disciplined investments across product, price and proposition,” it said.
Boohoo is rebuilding after a supply chain scandal in 2020 dented its reputation. It has invested in automation, refreshed ranges and cut costs.
The board remains confident in getting back to growth in the medium term and generating a 6-8% adjusted EBITDA margin.
John Lyttle, Group CEO, commented:
“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.”