By James Davey
LONDON (Reuters) -British online fashion retailer Boohoo reported a 7% fall in annual core earnings at the bottom end of guidance after revenue dropped 17%, which it said reflected difficult market conditions and a strategy to target more profitable sales.
The group, like UK peer ASOS, was a winner during the COVID pandemic which drove a boom in online shopping. It has struggled since, hurt by supply chain issues, higher product returns, competition from rivals such as Shein and weakened consumer demand.
Shares in Boohoo, 22% of which are owned by Mike Ashley’s Frasers Group, were down 4.8% in early trading Wednesday, extending their year-on-year decline to 22%.
The group, whose brands include PrettyLittleThing, Karen Millen and Debenhams, posted an adjusted EBITDA, its preferred profit measure, of 58.6 million pounds ($73.2 million) in the year to Feb. 29, versus guidance of 58-70 million pounds and the 63.3 million it made in 2022/23.
At the statutory level, Boohoo’s pretax loss swelled to 159.9 million pounds from a loss of 90.7 million previously.
Boohoo said it had made progress in repositioning the group for sustainable, profitable growth and remained confident in its medium term EBITDA margin target of 6% to 8%, up from 4% in 2023/24.
It said it would continue to leverage increasing efficiencies generated by investment in automation.
In 2023/24 Boohoo invested 64.8 million pounds in infrastructure, including a major automation project at its warehouse in Sheffield, northern England, and in a new distribution centre in the United States.
It said it was on track to deliver annualised cost savings of 125 million pounds in 2024/25 and it also forecast positive free cash flow in the year.
CEO John Lyttle said he had “strong confidence in our medium-term outlook”.
Last month, ASOS reported a first-half loss but said it expected to report positive core earnings for its full 2023/24 year. On Tuesday online fashion marketplace Zalando said it had returned to growth in its first quarter.
($1 = 0.8010 pounds)
(Reporting by James Davey; editing by Sarah Young and Jason Neely)
