Following today’s release of the boohoo group’s figures for year to 28 February 2023; Louise Deglise-Favre, Apparel Analyst at GlobalData, a leading data and analytics company, offers her view: “FY2022/23 was disappointing for former star of fast fashion, the boohoo group, as sales dropped 10.8% to £1.77bn. Although it was up against relatively strong comparatives (+13.6%), the switch back to instore shopping in the first restriction-free year hit the online specialist especially hard. The boohoo group also suffered from the meteoric rise of Chinese rival Shein, which gained market share thanks to its aggressively low prices and constant stream of new goods. Paradoxically, the group has also been affected by the growing criticism from some consumers against fast fashion, for both economical and sustainable reasons. boohoo expects revenue to continue declining between 10-15% in H1 FY2023/24 before returning to growth in H2, bringing its full year guidance between 0% and -5%. While it attributes the return to growth to its “investments in price, product and proposition”, easing inflation rates towards the end of 2023 will also play a part, freeing consumers to spend more on fashion.
“The group also swung to an operating loss of £82.2m in FY2022/23, contributing to its share price now being 90% lower than its peak in June 2020. Though part of this can be blamed on higher costs, boohoo’s business model of frequent discounting and low margins has made it particularly vulnerable in the current economic climate. As a result, it has reportedly asked for a 10% discount from some of its UK suppliers, which may help the bottom line but hurt its ethical reputation even further.
“Revenues in the UK and the rest of Europe fell 9% and 8% respectively in constant currency as the regions were the hardest hit by high inflation, causing many consumers to reconsider their apparel purchases, prioritising spending on long-lasting quality and versatile pieces rather than frivolous low-quality garments that will fall out of fashion quickly. The group’s young shoppers typically purchase the highest volumes of clothing too, leaving them with more scope to cut back on consumption. Furthermore, the introduction of return fees on some of its brands in the UK may have deterred some consumers, as unlike Zara, which also now charges for returns, the option to return for free instore is not possible.
“Despite inflation being softer in the US, it was the group’s worst performing region, with constant currency sales dropping 24%. The group’s lack of local distribution centre has left it unable to match the delivery efficiency of competitors, and although a warehouse is set to gradually open across late 2023 and early 2024, its brands might have already lost their momentum due to the dominance of rivals such as Fashion Nova and particularly Shein. The boohoo group will have to double down on its marketing efforts through buzzworthy collaborati
