British online fashion retailer Boohoo has today reported a 28% fall in annual core earnings that reflected significant freight and logistics cost inflation.
The company also warned that pandemic-related external factors will continue to impact it this year.
The group said today it made adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of £125m in the year to February 28 - in line with guidance and down from £173.6m in 2020-21.
Revenue rose 14% to £1.98 billion.
Boohoo, which sells clothing, shoes, accessories and beauty products aimed at 16 to 40-year olds, had warned on annual profit in December.
It had blamed a spike in product return rates, disruption to international deliveries and higher inbound freight costs.
For the 2022-23 year the group forecast "low-single digits" revenue percentage growth and adjusted EBITDA margin of 4% to 7%, compared to 6.3% in 2021-22, as it expects to continue to be hit by pandemic-related factors that negatively impact costs within its supply chain.
It forecast revenue growth to be broadly flat in the first half of 2022-23 as relatively higher product returns rates lead to net sales being down year on year in the first quarter, with a return to growth in the second quarter.
Performance is expected to improve in the second half of the year, the company said.
Boohoo said it would focus on retaining the market share gains it has made over the course of the last two years.
It intends to maximise efficiencies in its operating model and mitigate where possible before passing prices onto consumers.
Before today's update analysts were on average forecasting EBITDA of £136.4m for 2022-23.
The retailer is also targeting increased sourcing from the near-shore markets of the UK, Europe and northern Africa to reduce supply lead times, its boss said today.
"We've been previously at about 40% near-shore markets and at the minute we're building that up to 60%," CEO John Lyttle told Reuters.
The move will reduce Boohoo's exposure to elevated inbound air and sea freight costs from Asia. Supplies from Europe can be trucked.
"Our Asia sourcing is still very fast in comparison to most retailers," said Lyttle.
"It's really just that availability of aircraft and the cost of air freight and sea freight," he added.
The CEO said Boohoo suffered during the 2021 peak season as delays getting supplies to Asian ports and airports and onto ships and planes was adding weeks to lead times.
