The British fast-fashion e-tailer Boohoo reported annual profits up by more than a third but warned that revenue growth will be weaker and returns will increase in the current fiscal year as the economy returns to normal after the disruption caused by the Covid-19 pandemic.
Pre-tax profit for the year to Feb. 28 rose by 35 percent to £124.7 million (€145m-$173.6m) as revenues jumped by 41 percent to £1.75 billion (€2.02bn-$2.4bn). U.K. revenues rose by 39 percent and income from international operations increased by 44 percent, with the U.S. up by 65 percent. The gross margin rose by 0.20 percentage points to 54.2 percent.
The owner of PrettyLittleThing and NastyGal benefited from shoppers moving online during Covid-19-related lockdowns but noted a large decline in sales of dresses and “going out” clothes as venues closed and more people worked from home, although it hopes these will rebound in coming months. Active customer numbers were up by 28 percent to 17.8 million while orders rose by 27 percent to 53.4 million.
Boohoo expects revenue to grow by some 25 percent in the current year with newly acquired brands such as Debenhams and Dorothy Perkins contributing about 5 percentage points.
The company said trading in the first few weeks of this year was encouraging, but the benefit from lower customer returns was likely to fade while higher carriage and freight costs would also impact results.
Over the past year, Boohoo has picked up brands from struggling rivals including Oasis, Warehouse, Burton and Wallis. It has also overhauled its supply chain after a scandal about low wages and poor treatment of workers at supplier factories in the Leicester area. It added that Miss Pap, Karen Millen and Coast, bought the previous year, “are growing well, with solid foundations being built and the promise of bright futures.”
The group said Brexit-related customs compliance fees and duty on some products resulted in moderately increased costs which would continue in the new financial year, although it would seek to mitigate them through operational efficiencies.
“Full-year 2021 has been a year of significant investment for the group as we build a platform for the future and I am very pleased to report a strong financial performance,” said chief executive John Lyttle. “Our newly acquired brands are being re-energized and made relevant for today’s consumer across a broader market demographic. We are very excited about their potential and are already seeing the early rewards from their growth.”
Danni Hewson, financial analyst at trading platform AJ Bell, said the integration of brands like Debenhams will require Boohoo to “attract a new shopper”.
“Price is undeniably important, but as retail reopens and competition intensifies the story behind the brand will become ever more important,” she said.