Boohoo shares hit as H1 revenue falls 17% to £729m

Shares of Manchester-based online fashion giant Boohoo fell about 10% after it announced results for the six months ended August 31, 2023, showing revenue down 17% to £729.1 million and adjusted loss before tax of £9.1 million.

Boohoo’s brands include PrettyLittleThing and Nasty Gal.

In its outlook the firm said: “Given the slower volume recovery than previously anticipated and the continued targeting of more profitable sales within our labels, revenues for the year ending 28 February 2024 are now expected to decline by 12% to 17%.

In line with prior guidance, adjusted EBITDA margins are expected to be between 4% and 4.5% given the strong progress made on gross margin and cost control.

“Adjusted EBITDA is expected to be between £58 million to £70 million. Capital expenditure is expected to be approximately £75 million.”

Boohoo CEO John Lyttle said: “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.”


Richard Hunter, Head of Markets at interactive investor: “Boohoo has become more associated with red flags rather than glad rags, but this latest update at least offers some glimmers of hope.

“The group has recognised that it needs to trim some fat, and has identified £125 million of annual cost savings over the next two years.

“At the same time, with the supply chain easing and with lower input prices beginning to filter through, boohoo has been able to pass on some lower prices to customers. Indeed, the group estimate that its average selling prices have fallen over the last year, as compared to price inflation of 8% for the wider UK clothing market.

“These factors have also helped the gross margin along, with the number rising slightly from 52.5% to 53.4%. Excess inventory has also been reduced by 35%, releasing some cashflow, and despite an increase in net debt to £35 million from a previous £10.4 million, a newly renegotiated revolving credit facility gives further access to liquidity of £290 million, easing any shorter-term cash crunch concerns.

“More broadly, the group’s business model allows flexibility and value to an ever-changing youth fashion market, while the acquisition of names such as Debenhams and Coast provide potential appeal across new audiences. Its determination to expand and automate is also in evidence with a new facility in Sheffield and, in particular, the launch of a new distribution centre in the US.

“Boohoo is swimming against a strong tide, however, and recovery is not likely to become any easier. Online retail shopping has normalised to pre-pandemic levels as customers have returned to physical sites, while general inflationary and consumer confidence pressures remain in place. Revenues for the period dropped by 17% and gross profit by 16%, while at a headline level there was an adjusted pre-tax loss of £9.1 million, which compares to a profit of £6.2 million the year previous.

“Revenues in core brands dropped by 10%, and active customer numbers reduced by 12% to stand at 17 million. In terms of outlook, the group is guiding a full-year revenue decline of between 12% and 17%, with adjusted earnings margins of between 4% and 4.5%, in contrast to the longer-term goals of 6% to 8%.

“The accompanying comments from boohoo are defiantly optimistic, with the group pointing to a “clear path in improved profitability and getting back to growth. The group added that substantial progress had been made across key projects and initiatives over the first half, lending confidence to medium-term prospects.

“Even so, the scale of the challenge in boohoo’s rehabilitation remains significant, as evidenced by its share price performance and the accompanying valuation. Over the last year, the shares have dropped by 13% as compared to a fall of 12% for the wider FTSE AIM 100. This further decline has resulted in a plunge of 86% over the last two years, and 91% over the last three.

“Prospects for a recovery and the depressed share price may have tempted Frasers Group to recently up its stake to 9.1% from 7.8%, but for investors the outlook is potentially fraught with difficulty. The market consensus of the shares has nonetheless remained at a hold, suggesting some guarded support for a potential improvement in fortunes, despite a typically volatile and initially negative share price reaction to the update.”

Aarin Chiekrie, equity analyst at Hargreaves Lansdown: “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.

“Revenue was down 17.4% in the first half, as active customer numbers declined at double-digit rates. That’s hurting volumes and means the group’s going to have to rely on price hikes in the near term if it wants to stem the bleeding. But given that the group’s at the very lower end of the pricing scale, even large single-digit price hikes aren’t likely to move the dial much. That’s seen the full-year revenue outlook get downgraded significantly from anywhere between a 0-5% decline to a 12-17% decline, which even looks like a tall order at this point.

“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.

“In the medium term, there’s a glimmer of hope that things could pick up again. The group’s spent heavily on increasing capacity, especially abroad where there’s more room for growth. In the US, which is seen as the group’s route to major growth, the distribution networks came online in August, and are likely to become fully operational in 2024. If boohoo can get its proposition right here, we could see volumes recover somewhat and fortunes turn positive again. That’s still a big ‘if’ – but the group’s got some liquidity which provides a bit of breathing room to weather the storm.”