Boohoo warns on profits as customers rush to return party clothes

The Manchester-based retailer also cited disruption to international deliveries and COVID-19-related cost inflation.

Boohoo said it expects its full-year earnings to now rise by between 6 per cent and 7 per cent, lower than the forecasts of a 9-9.5 per cent increase.

It said the new Omicron coronavirus variant could pose further demand uncertainty and elevated returns rates particularly in January and February.

Shares in the group, which sells clothing, shoes, accessories and beauty products aimed at 16 to 40-year olds, were down 12.6%.

Boohoo has been seeking to improve its image after negative publicity over supply chain failings but had warned on the full year outlook in September.

The group said it expected net sales growth in the year to Feb. 28 2022 to be 12% to 14%, compared to previous guidance of 20% to 25%.

"This is due to significantly higher returns rates impacting net sales growth and costs, with continued extended delivery times impacting international demand, consequently driving lower returns on marketing expenditure, and significant ongoing pandemic-related inbound freight cost inflation," it said.

Return rates across the industry were low during pandemic lockdowns, but have increased as consumers sought more occasion wear as restrictions have eased.

Updating on trading for the three months to Nov. 30, Boohoo said gross demand had exceeded that achieved in each of the first and second quarters. Gross sales were up 28% and net sales were up 10%.

The group said its full year guidance reflected an expectation that the factors impacting its performance would persist for the remainder of the financial year.

Boohoo also flagged higher exceptional items for the year of around 33 million pounds, versus 22.5 million previously guided, primarily due to warehouse and new brand restructuring.