Boohoo's Sales Dip as Shoppers Return to Brick-and-Mortar Stores
Fashion giant Boohoo, known for its online retail presence and multiple brands like Pretty Little Thing and Dorothy Perkins, is facing a major setback as shoppers flock back to the high street. The company has warned that annual sales could drop by as much as 17 percent, causing concern among investors.
Shift Away from Online Shopping
Boohoo had initially predicted a more moderate decline of five percent in sales as it faced tough comparisons to the online shopping boom during the pandemic. However, the shift back to offline shopping after Covid has led to a 12 percent drop in customer numbers, resulting in further sales decline for the company.
Tough Competition and Shrinking Sales
Boohoo has tried to combat competition from Chinese rival Shein by cutting prices, but its efforts have not been enough to halt the sales decline. Group sales for the Manchester-based business fell by 17 percent to £729 million in the six months leading up to the end of August. As a result, pre-tax losses widened from £14.7 million to £26.7 million.
Impact on Share Values
The news of Boohoo's shrinking sales has taken a toll on its share values. Shares in the company have dropped by another five percent to 30.2p, lowering its valuation to just £383 million. This is a significant decrease from its mid-Covid value of 413p and its 2020 market valuation of £3.8 billion.
CEO's Outlook and Strategies
Boohoo's CEO, John Lyttle, remains confident that the company can recover, but acknowledges the challenging circumstances. The company has recently opened a warehouse in the US to address shipping delays and has invested £125 million in automating its Sheffield warehouse. However, doubling annual sales to cope with the current market conditions presents a significant challenge.
Continued Investment in Influencers
Despite the sales slump, Boohoo is still committed to working with star influencers to promote its brands. The company has enlisted the help of model Elle Macpherson for its Karen Millen brand, and reality TV star Kourtney Kardashian and supermodel Naomi Campbell for Pretty Little Thing. Boohoo plans to spend £90 million on marketing this year.
Shift in Consumer Behavior
Overall figures for the UK retail industry indicate that online sales fell by 1.7 percent in August, while in-store sales saw a 1.3 percent increase. These numbers, from the British Retail Consortium, suggest that consumers are opting for shopping centers and physical stores over online shopping.
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