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Online fashion group Boohoo has reported first-half profits ahead of analysts’ expectations and raised its full-year forecasts, just days after a report found the company lacked adequate oversight of its supply chain.
Sales for the six months to the end of August were £816m, up from £565m the year before and well ahead of the £773m average of analyst forecasts compiled by the company, Boohoo said in a statement on Wednesday.
Adjusted earnings before interest, tax, depreciation and amortisation were £89.8m, up 48 per cent and ahead of the £81.2m analysts had forecast.
Boohoo said it now expected revenue growth of 28 per cent to 32 per cent for the full year, up from previous guidance of 25 per cent. The group’s ebitda margins will be about 10 per cent, at the top end of previous expectations but less than the 11 per cent reported in the first half because of likely higher marketing spend.
It added that its planning included expectations of growing economic uncertainty “including possible reduced consumer spending” as well as more normal return rates and higher shipping costs to overseas markets.
Capital spending is also expected to be higher than previously anticipated as it invests in warehouse automation and IT.
The company has benefited from the Covid-19 pandemic. Its short and responsive supply chain allowed it to quickly shift to selling the loungewear and athleisure that customers wanted in lockdown, while its online-only business was unaffected by the 12-week closure of non-essential retail in the UK.
But the group remains controversial. An independent review by Alison Levitt, a former legal adviser to the Crown Prosecution Service, which was commissioned in response to media reports of workers in Leicester making clothes for Boohoo earning half the UK’s statutory minimum wage, concluded that the company had failed to take such concerns seriously enough.
But Ms Levitt said she was satisfied that Boohoo did not deliberately allow poor conditions and low pay within its supply chain, did not intentionally profit from them and did not break any laws.
Boohoo’s previously high-flying share price almost halved in the wake of the allegations but staged a partial recovery after the report was released and the company pledged to appoint additional non-executive directors, improve internal processes and controls and build its own factory in Leicester.
In its trading update on Wednesday, Boohoo said sales in the UK, still its biggest market, rose 37 per cent during the period, while Europe was up 40 per cent and US revenue almost doubled.
It also benefited from the acquisition during the half of the remaining 34 per cent of Pretty Little Thing, a brand run by the son of Boohoo’s founder Mahmud Kamani.
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