Fashion giant Boohoo Group (GB:BOO) posted its half-yearly results for 2022 with a warning of lower sales and profits ahead.
The company’s revenue fell by 10% to £882 million, mainly due to weaker demand in the second quarter in the UK. Higher product returns during the period added fuel to the fire.
Internationally, revenues in the U.S. markets were down by 29%, where they suffered due to higher delivery times.
Profits were hit hardest, and adjusted earnings fell by 58% to £35.5 million on account of higher freight and shipping costs clubbed with lower sales.
Boohoo expects a similar level of low demand in the second half of 2022, and therefore it cut its earnings margin range from 4-7% to 3-5%.
The results and the warning came as another jolt to Boohoo’s already struggling share prices. The stock has been trading down by 85% in the last year, mainly due to fading sales and the ongoing probe from the UK Competition and Markets Authority (CMA) over the sustainability claims.
What brands does Boohoo own?
Boohoo Group is a leading online retailer that offers men’s and women’s clothing for fashion-conscious customers.
Boohoo brands include Karen Millen, PrettyLittleThing, Coast, Nasty Girl, Boohoo, Boohooman, Debenhams, and more.
Boohoo share price forecast
According to TipRanks’ analyst consensus, Boohoo stock has a Hold rating. The rating is based on three Hold and one Sell recommendations.
The average price target is 46.67p, which shows a change of 27% from the current price level.
Caroline Gulliver, the analyst at Stifel Nicolaus, commented on the results, “We had hoped for better.”
Conclusion
The company blamed the cost-of-living crisis, which has reduced consumer spending and hence demand.
Even though most of the problems are on a macro level and beyond the company’s control, the company also has its fair share of internal issues. Higher spending, unutilised warehouses, and distribution issues were all reflected in the results.
