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UK fast-fashion retailer Boohoo has slashed its annual sales and profit forecasts as consumers scale back.
The company said on Tuesday that it expected revenues to decline between 12 per cent and 17 per cent in the 12 months to the end of February. In May, Boohoo said the drop would be 5 per cent at most.
After emerging as a winner from the pandemic-driven boom in online shopping, Boohoo has since struggled with falling demand and rising costs.
The company warned that a weaker top line would also hit profits in its current financial year. Adjusted earnings before interest, tax, depreciation and amortisation would be between £58mn and £70mn, it said on Tuesday, down from a previous range of between £69mn and £78mn.
Chief executive John Lyttle said “more than £125mn of adjusted cost savings that support our investment programme” had been identified and that his “confidence in the medium-term prospects for the group remains unchanged”.
Capital expenditure for this year has also been scaled back to £75mn from a range of between £80mn to £90mn. Boohoo also owns the Karen Millen and Debenhams brands.
Analysts at Shore Capital said that the group’s “recalibration in revenue expectations is influenced by a slower than anticipated volume recovery and a continued focus on more profitable sales”.
Shares in Boohoo fell 10 per cent in early trading, leaving them down 93 per cent from a record high hit in 2020, when investors raced to back potential winners from the accelerating shift to online shopping.
The group also suffered a shareholder rebellion over its executives’ pay packages at the annual general meeting in June, with a third of shareholder votes cast against the annual remuneration report.