Boohoo crumbles as the fast fashion boom runs out of steam

Boohoo crumbles as fast fashion boom comes to a halt with rivals Asos and In The Style also










Investors fled the fast fashion yesterday after Boohoo warned its profits would be hit by rising costs and the end of the foreclosure.

Shares of the Manchester-based company plunged 15.1%, or 38.7p, to a 17-month low at 217.3p, while rivals Asos and In The Style fell 7.4% and 10.2%.

Collectively, the three companies have seen £ 3.3bn wiped off their valuations since the start of the year.

Counting costs: Boohoo took a £ 26million hit from rising costs of shipping its discounted clothes

The results were the first crash in Boohoo’s sales figures since the start of the pandemic.

In the three months leading up to the end of August, sales rose 9%, a sharp slowdown from the 32% growth rate in the previous quarter.

Boohoo’s profits were also hit by £ 26million by the increased costs of shipping their discounted clothing from their factories in Asia.

And the company has had to raise wages in its warehouses to tackle staff shortages, while additional border controls after Brexit have hit margins as well.

Overall profit before tax fell 64% to £ 24.6million in the six months ending in late August.

The bottom line was also hit by massive investments in its stable of newly acquired brands including Debenhams.com, Wallis and Arcadia’s Burton and Dorothy Perkins.

She spent money to incorporate their clothes into her business, as well as advertising to revitalize their image.

In another coup, bosses revealed Boohoo was hit as the percentage of returned clothing returned to pre-pandemic levels as customers buy more fitted clothing such as jeans.

But they were confident for the rest of the year, saying the company is expected to emerge from the pandemic in a much stronger position than it was two years ago.

Managing Director John Lyttle said: “We are delighted to have doubled our market share in key markets such as the UK and US, and are excited about the global potential of all of our brands.

Boohoo shares have seen a scorching run in 2021, falling more than 36% since the start of the year. Before the sweatshop scandal, they were trading at over 400p.

Asos shares have fallen 37% this year. In The Style has lost 46% of its market cap since going public in March and is worth just £ 67.2million.

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