Boohoo sales and profits surge after fast fashion retailer ups loungewear and activewear offering during pandemic
Fast fashion retailer Boohoo reported a spike in sales and profit last year after refocusing its product offering on loungewear and activewear during the coronavirus pandemic.
The e-commerce giant announced this morning that revenue surged 41 per cent in the year ended 28 February 2021, with sales jumping from £1.23bn to £1.75bn.
Profit before tax was up 35 per cent from £92.2m to £124.7m during the same period and earnings per share increased 36 per cent from 5.35p to 7.25p.
Boohoo had £276m net cash at the end of the reporting period, an additional £35.4m.
It said it had increased its offering of activewear, loungewear and tops due to changes in demand from home working, which was “highly successful”.
The retailer also updated investors on its “agenda for change” programme, which it launched last year after an independent review confirmed reports of low wages and poor working conditions at its suppliers’ factories in Leicester.
Boohoo said it had audited the majority of its UK suppliers “at least twice” by the end of March, and had cut ties with firms that had not responded to demands to change their working practices.
It has also worked to address unauthorised sub-contracting by helping suppliers bring their Cut Make and Trim units in-house following recommendations made in last year’s damning report by Alison Levitt QC.
Boohoo said that in June last year it had finalised the purchase of a site to establish a “world class” garment factory in Leicester.
Despite the strong financial performance and update on its ESG improvements, Boohoo’s share price dipped 2.6 per cent this morning.
Investors could be wondering how the online retailer will continue its growth trajectory, or be unimpressed with its “agenda for change” so far, experts said.
“A stellar year for the financials is not the full story for Boohoo as it battled with reputational issues and bought more historic brands that it will need to integrate into its rapidly growing empire,” Julie Palmer, partner at restructuring firm Begbies Traynor, said.
“Such has been the online retailers success during lockdown that it may even be fearing whether it can repeat the sales feats of the past year in the coming 12 months. It’s a problem that the rest of retail wishes they had.
“However, the biggest point, written in bold letters on the board meeting agenda will be how it continues to repair its reputation. With the ESG investor on the rise and ethical consumers holding strong spending power, Boohoo will want to make sure its governance is ever improving so that its financials can too.”
John Moore, senior investment manager at Brewin Dolphin, added: “Boohoo is still delivering impressive growth in sales and has strengthened its cash position, but the share price has made little progress over the past 12 months.
“There are likely a few reasons behind that, the first of which is the ongoing questions around ethics, sustainability and supply chain issues.
“The second is the feeling that the acquisition of some brands over the last year or so may not offer the sales reach and density of the core brands and, therefore, could potentially dilute its proposition.”