Online fast fashion retailer Boohoo reported a 41% jump in full-year sales, as UK homework fueled growing demand for sports and leisure wear, offsetting the corresponding drop in clothing for the exits.
With social lives suspended for more than 12 months, sportswear sales rose during the pandemic, with Boohoo seeing what he described as “significant declines” in areas such as dresses and outlet wear. due to repeated Covid lockdowns which have left its customers with little reason to dress.
An added bonus for the company’s Boohoo, Pretty Little Thing, and Nasty Gal brands is that casual wear tends to have lower return rates than items like party dresses, available from Boohoo for as little as $ 7. $ – and sadly only 11c in a recent flash sale – as the Manchester-based group quickly turned to selling sweatpants and hoodies, designed for home comfort.
Just as the rise of super-fast Chinese fashion retailer Shein, Britain’s Asos and Australian clothing upstart Princess Polly have mirrored the fashion shift, so Boohoo has swept away many established brands.
Over the year, Boohoo purchased a number of well-known big UK brands that did not survive the pandemic, including struggling department store chain Debenhams.
Boohoo also acquired fashion brands Dorothy Perkins, Wallis and Burton from Sir Philip Green’s collapsed Arcadia group empire. Boohoo said he expects these new acquisitions to contribute around 5% to sales growth in the current fiscal year.
Indeed, with a market value of around $ 5.8 billion, Boohoo is already worth $ 1.4 billion more than UK spokesperson Marks & Spencer.
However, Boohoo kept the brands he bought but not the stores, resulting in a wave of store closings across the UK and the famous Topshop flagship on the corner of Oxford Street and Regent Street. in London’s West End is now on sale.
Online sales drive Boohoo’s growth
The Boohoo Group has benefited from the shift to online shopping as Covid restrictions have left many non-essential retailers closed for long periods of time. In the 12 months ending February 28, 2021, total sales reached $ 2.43 billion, compared to $ 1.67 billion for the comparable period of the previous year.
Indeed, sales exceeded expectations despite several upgrades during the year, while adjusted earnings before interest, taxes, depreciation and amortization were on plan at $ 241.6 million, up 37 %. Boohoo said revenue growth for the current year is expected to fall to around 25%, down from the 29% forecast by analysts. Sales are expected to be skewed to the second half of the year due to strong first-half comparisons, the company said, although an EBITDA margin target of 10% remains unchanged.
A recent deal for a new warehouse in Daventry, Northamptonshire is a clear indication of the scale of Boohoo’s ambitions, with the new facility intended to provide the group with the capacity to service annual sales of up to 5.6 billion dollars, more than double the current one. figure.
“Trade during the first few weeks of the fiscal year has been encouraging, however, the economic outlook remains uncertain,” the company said in a statement, releasing its results for the year through February. “We expect the benefits of reduced returns over the past 12 months to begin to wear off this year, while continuing to experience significantly high levels of transportation and freight.”
Supply chain scandal scares investors
Over the past year, Boohoo has also been hit by allegations that some of its suppliers are outsourcing the manufacture of clothing to Leicester-based companies paying their UK staff below minimum wage. News reports also reported poor working conditions at a Leicester-based company that supplied Boohoo’s Nasty Gal brand.
The company faced a backlash from investors and saw its stock nearly halved amid the disclosures, leading to an independent internal investigation into its supply chain. He has since set up an “agenda for change” program to develop “significant changes in the way we do business” and sacked a multitude of suppliers who could not guarantee the transparency of their supply chain.
Many large investors are still waiting until they are sure there are no more skeletons in the closet and that the company has taken some important steps to show that it has learned its lessons. Retired Judge Sir Brian Leveson is overseeing the ongoing overhaul of its supply chain, which has included the recent severing of ties with hundreds of suppliers and the end of outsourcing.
Mahmud Kamani, chairman of Boohoo, recently said the board plans to tie management bonuses to progress in improving its environmental, social and governance credentials.
Acknowledging the progress made, in his annual results, Boohoo chief executive John Lyttle said he was “proud to run a company which, instead of choosing to shy away from the allegations, made the immediate decision to do so. everything in his power to address them. “