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Boohoo warns profits impacted by higher returns rates and international delivery disruption

Boohoo has issued a profit warning in its latest trading update, blaming significantly higher returns rates impacting net sales growth and costs, as well as continued disruption to its international delivery proposition hitting international demand.

It said that net sales are being impacted by returns rates that are 12.5 percentage points higher than last year, and 7 percentage points higher than pre-pandemic levels.

International performance across the group’s brands and markets meanwhile are being impacted by significantly longer customer delivery times as a result of the pandemic. All the group’s international sales are currently fulfilled from Boohoo’s UK distribution network.

Sales in the US have also been hit by the impact of reduced air freight capacity on delivery times to customers.

The challenges of international distribution mean that the group is now looking at how it can accelerate the opening of its first US distribution centre, which is currently expected to go live in 2023.

John Lyttle, group CEO, said: “The strong performance in our core UK market, across both our established and acquired brands, demonstrates the potential to capture and grow market share in key markets. In international markets, our proposition continues to be significantly impacted by ongoing service disruption due to the pandemic, which, in addition to increased recent consumer uncertainty, has weighed on our performance.”

“The Group has gained significant market share during the pandemic. The current headwinds are short term and we expect them to soften when pandemic related disruption begins to ease. Looking ahead, we are encouraged by the strong performance in the UK, which clearly validates the boohoo model. Our focus is now on improving the international proposition through continued investment in our global distribution network, capable of delivering in excess of £5 billion of net sales, to support future growth.”

 

 

 

Image credits:
  • Boohoo