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Highllights
- Fashion retailer Boohoo Group PLC’s shares fell sharply by 16 per cent on Thursday.
- The group forecasts its FY 2022 net sales growth to be in the range of 12 to 14 per cent from earlier 20 to 25 per cent.
- The group’s total net sales, for the three-month period to 30 November 2021, rose by 10 per cent to £506.2 million in the past 1 year.
Fashion retailer Boohoo Group PLC’s (LON:BOO) shares fell sharply by 16 per cent on Thursday after the group cut its full-year guidance due to pandemic related disruptions.
Boohoo’s trading update
As per the latest trading update, the retail group’s total net sales for the three-month period to 30 November 2021 rose by 10 per cent to £506.2 million, from £460.7 million in the previous year. The sales growth was higher by 53 per cent from the comparable period 2 years prior.
The group’s gross sales were up by 28 per cent during the 3-month period on a year-on-year basis. And the total net sales for the nine-month period to 30 November 2021 rose by 16 per cent to £1,482.1 million, up from £1,277.1 million the year before. This was an increase of 65 per cent from the comparable period 2 years before.
The group’s UK region’s gross sales surged by 58 per cent for the 3-month period, from the year before.
For the 3-month period, UK net sales rose by 32 per cent from the previous year and zoomed by 78 per cent from 2 years ago.
Boohoo forecasts its adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) margin in FY 2022 to be between 6 to 7 per cent. The earlier guidance was between 9 to 9.5 per cent.
This cut in EBITDA margin is due to much higher return rates which will affect net sales growth and also costs.
Boohoo’s FY 2022 guidance
The group forecasts its FY 2022 net sales growth to be in the range of 12 per cent to 14 per cent. Boohoo had earlier forecasted a growth rate of 20 per cent to 25 per cent.
The cut in the FY 2022 outlook indicates Boohoo’s expectation that the factors weighing on performance in this period will continue for the rest of FY 2022. Some of the headwinds impacting Boohoo’s performance during this period include a rise in freight-related costs due to supply chain issues and more.
In addition to the above, the group also expects that the emergence of the Omicron variant may lead to additional uncertainty in demand and elevated returns rates, especially in the next few months of January and February 2022.
Boohoo Group PLC’s (LON: BOO) share price performance
Boohoo’s shares were trading down by 16 per cent at GBX 115.85 on 16 December at 10:21 AM BST, as seen in the EODHD/Others chart below.
Meanwhile, the FTSE AIM 100 index was at 5,753.63, up by 0.48 per cent. Boohoo is a constituent of the FTSE AIM 100 index. It was among the highest faller on the index following the news. The group’s market cap was £1,747.43 million as of 16 December.
Image source: EODHD/Others
