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Highlights
- Boohoo Group Plc reported £9 million in revenue, a rise of 20%, while its gross profit rose by 19% at £533.3 million for H1 ended 31 August 2021.
- The company has warned of a slowdown in sales growth in its guidance for full year.
FTSE AIM-listed Boohoo Group Plc (LON: BOO), which offers clothing and fashion accessories through its online fashion website, announced its interim result for the six months ended 31 August 2021. The fashion e-commerce company reported £975.9 million in revenue, a rise of 20%, while its gross profit rose by 19% at £533.3 million. However, its adjusted EBITDA was down by 5% at £85.1 million, while its profit before tax was down by 20% at £63.8 million.
The company’s stock was down by over 15% for the day after it warned of slowdown in sales growth in its guidance for the full year. The company mentioned multiple factors that could impact the revenue and profitability in second half of its financial year.
- The company’s products have a good reputation amongst the young generation. But its reputation took a hit last year when reports emerged that its UK-based supplier factory was not following the safety standards and labour worked under poor conditions. After the incident, to protect its brand image and safeguard its reputation, the company reduced its number of suppliers to 78 from 200. This issue is impacting the company right now as it is facing severe supply chain disruption.
- The company’s profitability took a hit during the first half due to higher shipping costs. Also, marketing costs were higher due to the relaunch of four new brands, including Debenhams.
- Shortage of warehouse worker in the UK was another issue which impacted the company. UK host the largest distribution centre of the company. Also, higher wages for its workers impacted profitability. As per the company, labour shortage across Britain will not disappear overnight and will impact its future revenues as well.
Labour shortage ahead of festival season
The supply chain disruption and worker shortage continue to impact overall economic growth in the UK and not just a single company. A similar warning was raised by the retail chain operator, Next Plc, in its half-yearly result. As per market experts, Britain is facing a labour shortage mainly due to Brexit. The movement of labour across the border has reduced considerably after Brexit and due to pandemic restrictions. Shortage of workers might adversely impact economic recovery and growth ahead of festival season in last quarter of 2021.
Boohoo Group Plc current market cap stands £3,237.26 million as of 30 September 2021. In the last one year, the stock has given a negative 43% return to its shareholders.
