8th May 2024 13:14
(Alliance News) - boohoo Group PLC on Wednesday said it is "well-positioned" for the future but reported a wider loss and revenue decline in a tricky financial year.
The Manchester, England-based fast fashion retailer reported a pretax loss of GBP159.9 million in the financial year that ended February 29, widened from GBP90.7 million the year before, as revenue fell by 17% to GBP1.46 billion from GBP1.77 billion.
Gross merchandise value fell by a less-steep 13% to GBP1.81 billion from GBP2.09 billion, which boohoo attributed to a "difficult macro-economic environment". Revenue was further hurt the growth of boohoo's marketplace, which has a commission-only revenue model.
boohoo said revenue also was hurt by its focus on profitability. Adjusted earnings before interest, tax, depreciation and amortisation was GBP58.6 million in financial 2024, down 7.4% from GBP63.3 million in financial 2023. This gave an adjusted Ebitda margin of 4.0%, improved by 40 basis points.
Revenue declines were across all of boohoo's sales regions. It fell by 16% in the UK, boohoo's largest market by far. It was down 18% in the US, 20% in the Rest of Europe, and 30% in the Rest of World.
boohoo said its annual results were in line with market expectations. With its investment cycle complete, it is now positioned for growth, it said. In the recent year, boohoo made GBP64.8 million in capital expenditure to automate its facility in Sheffield, England and on a US distribution centre.
Looking ahead to financial 2025, boohoo said it is targeting GMV growth and improvement to adjusted Ebitda margin, on its way to its medium-term target for a margin of 6% to 8%. To achieve this, it is on track for GBP125 million in annualised cost savings in the current year.
"The group is now well positioned to return to growth, and we are focused on ensuring that growth is both sustainable and profitable," said Chief Executive Officer John Lyttle.
boohoo also expects to generate positive free cash flow in financial 2025.
Shore Capital Markets analysts said the year just gone was a "reset year" for boohoo. It could see a margin improvement in times to come, though its outlook is clouded by rising competition, including from China's Shein.
"We believe boohoo should see incremental margin improvement going forward as a result of the previously announced cost saving programme, leveraging the in-house technology along with tight inventory supply," Shore added.
"We believe the group still faces market share pressures from Chinese fast fashion platforms as well as, well known high street competitors and consumer re-commerce trends, albeit stands in a slightly better position than peer Asos due to a less constrained balance sheet as well as diversification potential through digital department store Debenhams. Additionally, the damp weather appears to remain a headwind to the sector's current trading."
boohoo was one of the pandemic winners, as stay-at-home measures hurt traditional retail. Life after Covid has been tricky for the company, however.
Hargreaves Lansdown analyst Guy Lawson-Johns commented: "boohoo's full-year results were a painful read for investors. Revenue declined at high double-digit rates across all regions, including an 18% in the US, which is seen as the group's pathway to major growth. For now, it remains a struggling company with a tarnished reputation, reflected in the group's valuation, which has come down significantly over the last few years."
The stock traded 1.1% lower at 34.84p in London on Wednesday afternoon. Shares are down 91% from their best ever level of 433.50p, achieved in June 2020.
By Eric Cunha, Alliance News news editor
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