(Bloomberg) — Boohoo Group Plc is considering charging customers to send back garments as an increasing rate of returns crimps sales at the fast-fashion retailer.
The British firm, whose business is purely online, is looking at returns across all markets, Chief Executive Officer John Lyttle said in a phone interview Thursday, at a time when many retailers are trying to manage logistics costs.
While Boohoo already charges in some international markets, the move would be a first in some places, including the UK.
The company is weighing possible changes after Zara owner Inditex SA recently imposed fees for online returns to tempt customers into its brick-and-mortar stores.
Lyttle said a number of sellers are beginning to charge shoppers who send back goods.
Boohoo and Asos Plc both reported slowing sales on Thursday as the retailers — which saw demand surge during pandemic lockdowns — contend with the return of normal shopping habits and persistent supply chain woes.
Shares of both companies plunged.
When slashing its guidance for the year, Asos said that a significant rise in returns in the UK and Europe had hurt net sales.
It added that returns are having a “disproportionate impact on profitability.”
Asos currently does not charge for returns and isn’t thinking of charging right now, said Asos Chief Executive Officer Jose Antonio Ramos Calamonte in a media call.
Changing its returns policy could be significant for Boohoo, which has many young customers who tend to buy a number of low-priced items and then decide what to keep or send back.
Customers are becoming more selective and more likely to return items as they shop for clothes to wear at special events like weddings and parties, according to Boohoo’s Lyttle.
A year earlier, pandemic restrictions meant that athleisure was the dominant fashion and the fit was less important, he said.
“In the UK, the returns rate is a big factor and in international it’s taking us a lot longer to get parcels to customers,” said Boohoo Chief Financial Officer Neil Catto, speaking in the interview.
“Those factors still continue and we’re not expecting those to improve this year.”
(Updates with additional information on Asos returns in sixth and seventh paragraph.)
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