Boohoo in tears as shares hit by profit warning
BOOHOO’S shares plunged more than 40 per cent yesterday after the online fashion retailer issued a profit warning, blaming heavy discounting across the UK high street.
The company, which made its debut on London’s junior market in March, said price cuts by high street rivals looking to shift jumpers and coats following warm autumn weather hit demand in the run up to Christmas.
Warnings of delays to courier deliveries in the weeks before Christmas may have also deterred shoppers from ordering online, analysts said.
UK sales were up 25 per cent in the four months to 31 December. This was almost half the sales growth posted in the first half and well below City forecasts, which anticipated a marketing push in October to have boosted sales.
Boohoo said now it expected total revenue growth in the second half of the year to the end of February to be in line with the 25 per cent rise achieved in the last four months. Its full-year core earnings margin is also expected to remain at 10 per cent, compared to forecasts of 12.5 per cent.
Shares fell 42.5 per cent to 22p – more than half its initial offer price of 50p – as analysts slashed their full-year forecasts.
Peel Hunt’s John Stevenson, who cut his pre-tax profit forecast by 25 per cent to £12.5m, said a profit warning so soon after its float would raise questions over whether expectations at the time of the IPO were too stretching.