about 1 year ago • 2 mins
Online retailer Boohoo announced some tear-inducing results on Thursday.
What does this mean?
It's been a rough ride for Boohoo since the swell ol’ days of the pandemic, so investors were probably braced for even more pain this week. After all, the firm sounded the profit-warning alarm back in September, and its stock has been trading nearly 90% below 2020’s peak. That said, Thursday’s weepy news wasn't entirely Boohoo’s fault: the UK’s nation-stalling postal strikes turned online shoppers off just when crucial festive orders should have been pouring in. Plus, fierce competition from the firm’s Chinese rival Shein has been tamping down sales in its two biggest markets, the US and UK. No wonder that Boohoo – owner of fashion staples PrettyLittleThing and Karen Millen – reported that sales fell 11% over the last four months of 2022 compared to the same period in 2021. And to make matters worse, the firm forecast a similar drop in sales for the whole financial year – and dewy-eyed investors sent its shares down 9%.
Why should I care?
Zooming in: Returns hit returns.Rising prices have customers thinking twice about their latest style overhauls, and the resulting returned goods have been bloating costs for online retailers like Boohoo lately. But rather than bringing in a “no backsies” policy, the firm decided to charge customers for returns. Turns out that wasn’t what hard-up customers wanted, which might be why so many of them took their business to brick-and-mortar competitors with no-fuss returns policies instead.
The bigger picture: Watch this space.
Boohoo’s facing choppy waters, sure, but it’s taking clever steps to steady the ship. The firm’s cutting jobs right now, and it’s planning to source goods closer to home in a bid to minimize delays. It’s even slashing the amount of stock it holds, so it can react to the fickle winds of fashion even faster down the line.
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