16th Dec 2021 10:47
(Alliance News) - Shares in boohoo Group PLC on Thursday tumbled as the company warned that the Omicron variant of Covid-19 is harming sales and as a result lowered its guidance.
Shares in the Manchester-based firm were down 15% at 117.82 pence each on Thursday morning in London.
The AIM-listed online fast-fashion retailer cut annual sales and margins guidance due to Omicron uncertainty and because of a high product returns rate hitting sales. It also acknowledged that "continued disruption" to international deliveries alongside persistent virus-related cost inflation had hampered results.
However, boohoo said: "It is the view of the board that the factors currently negatively impacting the business are primarily related to the ongoing impact of the pandemic and are, therefore, transient in nature."
In the three months to November 30, net sales increased 10% year-on-year to GBP506.2 million from GBP460.7 million. On a two-year basis net sales were 53% higher.
The sales rise was attributed to "exceptional demand" in the UK that led to a net sales increase of 32% to GBP320.3 million from GBP243.6 million in the three month period a year before.
Nonetheless, net sales in the rest of Europe decreased 12% to GBP53.9 million from GBP61.2 million and 14% in the US to GBP104.6 million from GBP121.3 million. Boohoo blamed this on increased consumer uncertainty.
In the rest of the world, sales were down 21% to GBP27.4 million from GBP34.6 million.
Its international performance was impacted by reduced air freight capacity that led to significantly longer customer delivery times, the company said.
For the financial year ending February 28, boohoo now expects net sales growth in the 12% to 14% range, cut from previous guidance of 20% to 25% growth.
"This reflects our expectation that the factors impacting our performance in the period persist through the remainder of the financial year, and recent developments surrounding the Omicron variant could pose further demand uncertainty and elevated returns rates particularly in January and February," the retailer explained.
boohoo's adjusted earnings before interest, tax, depreciation and amortisation margin is expected to be between 6% and 7%, lowered from previous guidance of 9% to 9.5%. This will imply an adjusted Ebitda of GBP117 million to GBP139 million.
"The strong performance in our core UK market, across both our established and acquired brands, demonstrates the potential to capture and grow market share in key markets. In international markets, our proposition continues to be significantly impacted by ongoing service disruption due to the pandemic, which, in addition to increased recent consumer uncertainty, has weighed on our performance," Chief Executive John Lyttle commented.
He added: "The current headwinds are short term and we expect them to soften when pandemic related disruption begins to ease. Looking ahead, we are encouraged by the strong performance in the UK, which clearly validates the boohoo model. Our focus is now on improving the international proposition through continued investment in our global distribution network, capable of delivering in excess of GBP5 billion of net sales, to support future growth."
By Abby Amoakuh; [email protected]
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