Founder Mahmoud Kamani’s wealth has fallen by more than £500 million due to the falling share price of the troubled retailer
Embattled online fashion retailer Boohoo fell 6.4% in early trading this morning after alarm over the company’s profits and warnings of a drop in sales.
The firm’s revenue fell to £88.2 million in the six months to August, with a similar decline in sales expected over the next six months, the firm said.
It forecast earnings margins of between 3% and 5%, down from previous forecasts of between 4% and 7%.
Josh Holmes, Senior Consultant, Retail Economics, said: “These results confirm that all is not well at the retailer. No doubt, they are navigating through particularly challenging times with business models under pressure. “After a pandemic-fuelled boom, the habits of many shoppers have come back stronger than expected. Rising returns and weak demand, coupled with rising input and operating costs, have had a severe impact on profitability.
The Sunday Times reported earlier this week that Boohoo had started canceling orders from suppliers amid falling clothing demand. A spokesperson for the company said, “As one is faced with uncertain demand in the retail sector, we are continuously reviewing our requirements.
The retailer’s ‘Ready for the Future’ range is being investigated by the Competition and Markets Authority for exaggerating its environmentally sustainable claims. Boohoo said it is “committed to providing its customers with accurate information about the products they buy.” It comes a little more than a year after the firm faces a possible export ban in the US, after border security officials said they would investigate claims of forced labor in Boohoo’s supply chain.
Boohoo boss John Little said: “Performance in the first half was impacted by a more challenging economic backdrop weighted on consumer demand.
“We have a clear plan in place to improve future profitability and financial performance through self-support through the delivery of key projects, which will position us well as macro-economic headwinds are readily available.”
The troubled retailer’s share price has seen founder Mahmoud Kamani’s wealth drop by more than £500 million over the past two years, while Boohoo’s shares are now at their lowest in the UK, according to Research Tree insights.
Credit: www.standard.co.uk /