Following today’s release of the boohoo group’s figures for the six months to 31 August 2023; Louise Deglise-Favre, apparel analyst at GlobalData, a leading data and analytics company, offers her view: “The boohoo group’s performance continued to plummet in H1 FY2023/24, with group revenue down 17.4%, following a disappointing 10.4% drop in FY2022/23 and falling below its guidance of a 10% to 15% decline. This has forced the group to reckon with reality and drastically lower its full year guidance to a sales decline between 12% and 17%—far lower than its previous expectations of a drop no larger than 5%. Its struggles are largely due to the meteoric rise of Shein, which has jumped to the top of the ultra-fast fashion game and continues to steal market share. Shein is more agile than boohoo and offers unbeatable low prices while keeping up with the endless stream of new micro-trends appearing on social media. Paradoxically, the group has also suffered from growing criticism from some consumers against fast fashion, decrying its environmental and social impacts. However, its efforts to boost profitability have led to some success, with an improvement in its EBITDA margin, supporting future investments. It has also strengthened its test-and-repeat model, improving lead times and reducing stock excess, which should allow it to better compete with Shein.
“Revenues in the UK and the rest of Europe dropped 19% and 16% respectively in constant currency, as high inflation continued to wreak havoc on consumers’ disposable incomes causing fashion volumes to decline. Many consumers have also reassessed their priorities while shopping for apparel, now preferring to purchase longer-lasting versatile pieces rather than low quality, trend-led garments that become outdated quickly. In the US, sales dropped 12%, held back by long delivery times for most of the period, however, it successfully opened its US distribution centre in August, which will allow it to improve its US customer experience. The group still has to contend with tough competitors such as Shein and Fashion Nova in the American market though and will need to upscale its marketing efforts if it hopes to compete.
“The boohoo group stated that sales of its core brands (boohoo, boohooMAN, PrettyLittleThing, Karen Millen and Debenhams marketplace) dropped 10%, outperforming its total sales, which indicates that the brands the group acquired during the pandemic, such as Wallis and Dorothy Perkins, have been dragging its performance down. These brands continue to suffer from the dull brand images they had prior to their acquisitions, and the boohoo group so far has been being unsuccessful at refreshing their identities, missing out on the opportunity to diversify its total customer base to a wider age range. On the other hand, PrettyLittleThing, boohoo and Karen Millen will have benefitted from strong marketing, including collaborations with high profile celebrities such as Naomi Campbell, Kourtney Kardashian Barker and Tyra Banks.”
