By Scott Kanowsky
Investing.com -- London-listed shares in Boohoo Group PLC (LON:BOOH) fell sharply on Wednesday after the online fast fashion brand reported a steep decline in half-year core profit and cut its annual guidance, citing the effect of surging inflation on sales.
Adjusted earnings before interest, taxes, depreciation, and amortization dropped to £35.5M in the six months to August 31, down by 58% compared to the same period last year, while its income margin slid to 4% from 8.7%.
Demand was weaker than anticipated during the period, Boohoo said, as shoppers, especially in the U.S., reined in spending in response to soaring consumer prices. Revenue dipped by 10% to £882.4M.
Freight and logistics costs were also elevated, although this uptick was partially offset by a decision to move supply chain sources away from the Far East, where COVID-19 lockdowns in China have weighed on the crucial flow of goods out of the country.
Core income came in 11% under consensus forecasts, according to analysts at Morgan Stanley. Sales missed by 8%.
Meanwhile, Boohoo lowered its outlook for adjusted profit margins for its current financial year to between 3% to 5% from a prior range of 4% to 7%. It also warned that revenues are now expected to fall in 2022 at a rate "similar" to the slump seen in the first half.
In a statement, the firm said it will focus on optimizing its operations to keep costs down, adding that this strategy will allow it to be "well-positioned to improve future profitability."