Boohoo Moves US Fulfillment Operations to the UK

September 11, 2024 05:57 PM AEST | By Team Kalkine Media

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Boohoo Moves US Fulfillment Operations to the UK — Image source: shutterstock

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Boohoo Group PLC (LSE:BOO) has announced that it will begin fulfilling US orders from its advanced automated distribution center located in Sheffield, UK. This strategic move aims to expand the product range available to US customers, who currently have access to only 60% of the styles offered in the UK.

The decision to centralize US distribution in Sheffield is expected to involve a write-down of investments and associated costs for establishing these new distribution capabilities. However, the company anticipates a significant reduction in ongoing costs over the medium term as a result of this operational shift. The Sheffield distribution center, which commenced operations in 2023, was designed to enhance next-day and express delivery options for US customers.

This transition may raise environmental, social, and governance (ESG) concerns due to its impact on the company's carbon footprint. While Boohoo produces a portion of its garments domestically within the UK, it also sources products from manufacturers in South Asia. The increased logistical footprint associated with shipping from the UK to the US could exacerbate these concerns.

Earlier this year, Boohoo faced criticism for inaccurately labeling some garments as made in the UK, which has further heightened scrutiny regarding its sourcing and manufacturing practices. In response to shifting operational strategies, Boohoo plans to close its distribution center in Elizabethtown, Pennsylvania, by November. This move is part of a broader strategy to streamline its distribution network and improve efficiency in meeting US customer demand.

As Boohoo navigates these changes, the impact on its supply chain, operational costs, and ESG performance will be key factors to monitor.

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