The Digital Fast Fashion Retailer to Cut 1,000 Jobs After Reporting Annual Loss of 76% and £95 Million in Debts
Boohoo, the online fast fashion retailer that also encompasses brands Debenhams, Warehouse, Dorothy Perkins, and Pretty Little Thing, has announced significant workforce reductions and financial setbacks in response to escalating losses and diminished sales. The news marks a challenging period for the company amidst intensified competition from online rivals such as Shein and shifts in consumer behavior following pandemic-related lockdowns.
The company reported a substantial decline in sales, down 13 percent, contributing to a widened loss of 76 percent, totaling £160 million, for the fiscal year ending February. Boohoo’s net debts ballooned to £95 million compared to nearly £6 million in net cash the previous year.
John Lyttle, Boohoo’s chief executive, attributed the company’s struggles to adverse market conditions characterized by inflationary pressures and weakened consumer demand. To address these challenges, Boohoo has outlined plans to achieve savings of £125 million in the coming year, which includes implementing more automation in its Sheffield warehouse, shuttering a facility in Daventry, and establishing a new warehouse in the United States.
Amidst these efforts, Boohoo disclosed a reduction of over 1,000 jobs throughout the year, coinciding with an 11 percent decrease in active customers on its platform, who exhibited reduced spending and frequency of visits.
Despite these measures, Boohoo’s share price experienced a decline of over 3 percent, underscoring the company’s ongoing struggle. This downturn contrasts starkly with its previous market performance, with shares now valued at less than a tenth of their value three years ago.
The company’s underperformance had additional ramifications, as it failed to fulfill its commitment to allocate 16 million shares to Pretty Little Thing shareholders led by Umar Kamani, due to Boohoo’s share price failing to meet the required threshold of 491p by March of the current year.
Boohoo acknowledged the challenging trading conditions characterized by cost inflation, increasing competition, and shifting consumer preferences towards online channels, but expressed confidence in its business model and strategic direction to regain market share.
