Boohoo Shares Fell 10.9% on a Decline in H1 Revenue and Profits

The Boohoo Group PLC (LON: BOO) share price fell 10.88% after releasing the interim results for the six months ended 31 August 2023. The fashion company noted that revenues in its core brands fell 10%, as expected since the figure was within the lower range of the expected drop in its revenues between 10% and 15%.

The adverse investor reaction was also expected, given the revenue decline reported by the fast fashion company. The company attributed the lower sales to its decision to pursue more profitable sales to increase profitability, which translated to improved group profits.

Boohoo’s revenues fell 17% during the six months to £729.1 million compared to £882.4 million in the six months to 31 August 2022. The company’s profits fell 16% to £389.2 million from £463.5 million in the first half of 2022. However, the company’s gross margins rose 90bps to 53.4% from 52.5%. 

The fast fashion company noted that sales in the UK fell 19%, while sales in international markets were down 15%. The firm managed to lower its average selling prices compared to last year despite the UK clothing market witnessing an 8% price increase. 

Boohoo strengthened its test & repeat model, significantly improving lead times. The company also captured the supply chain deflation and lower input prices while reinvesting the savings to support lower customer prices and faster lead times. 

The company successfully launched its US distribution centre, allowing it to introduce next-day and express delivery options in the critical US market. The company intends to phase in more brands over the next twelve months. 

John Lyttle, Group CEO, commented: “Over the first half, we have made substantial progress across key projects and initiatives, including the launch of our US distribution centre. We have seen significant improvements in sourcing lead times and invested in pricing to reinforce our value credentials. We have identified more than £125 million of annualised cost savings that support our investment programme. Our confidence in the medium-term prospects for the Group remains unchanged as we execute on our key priorities where we see a clear path to improved profitability and getting back to growth.”

Boohoo share price. 

Boohoo shares plunged 10.88% to trade at 28.19p, from Monday’s closing price of 31.63p.