Boohoo Shares Slide On Forecasted 12% Revenue Decline

Boohoo (LON: BOO) shares fell over 5% early Thursday after the online fashion retailer said it expects revenues for the year ending February 28 to decline.

In addition, for the four months to December 31, a key trading period, Boohoo's revenue declined 11% to £637.7 million from £714.5 the previous year as the company was impacted by a strong prior year comparative and extended delivery times compared to pre-pandemic levels.

Gross margin for the period came in at 49.7%, broadly in line with expectations, and Boohoo expects it to improve year on year in P4 with a decline in markdown activity anticipated compared to the same period last year.

The AIM-listed company added that inventory “continues to be tightly controlled” and was reduced, down 27% year on year.

“We have reduced inventory by 27% year on year and with this focus on careful inventory management, strong cost control and cash management, we will continue to drive operational and cost efficiency across the business,” said John Lyttle, Boohoo CEO.

Looking ahead, Boohoo said for the year ending February 28, adjusted EBITDA is expected to be in line with market expectations, while revenues are expected to fall approximately 12%, with an adjusted EBITDA margin of roughly 3.5%.

The company said the demand outlook is uncertain due to macroeconomic factors, but they believe cost inflation will begin to moderate in the second half of the year.

“With recent positive signs in global supply chains, we expect to see some easing of disruption along with some relief to freight rates,” the company said. “Combined with the actions being undertaken on costs across the Group, it is expected that overall cost growth begins to moderate as the year progresses along with an improved cost inflation outlook exiting the year ahead.”