Yahoo Finance Boohoo profits soar as Covid turns customer focus to loungewear
Sales and profits soared at the online fashion retailer Boohoo during the coronavirus pandemic as it benefited from the boom in online shopping and being able to trade throughout successive lockdowns, unlike its high street rivals.
Demand from younger consumers for its inexpensive activewear, loungewear and tops while working from home helped Boohoo’s sales climb by 41% to £1.7bn, up from £1.2bn a year earlier.
Related: High street shops in England and Wales repurposed as climate emergency centres
Boohoo’s adjusted pre-tax profit climbed by 37% in the 12 months to 28 February to a better-than-expected £174m as the group’s customers shrugged off concerns about the group’s supply chain, following last summer’s allegations that linked it to factories with poor working conditions in Leicester and abroad.
Manchester-based Boohoo, which also owns the brands PrettyLittleThing and Nasty Gal, was able to take advantage of the declining fortunes of more traditional retailers during the pandemic. It acquired high street brands including Oasis, Warehouse and Karen Millen, as well as Dorothy Perkins, Wallis and Burton from Sir Philip Green’s collapsed Arcadia group.
WATCH: Debenhams reveals date for final store closures ahead of Boohoo future
The web-only group also picked up the Debenhams brand from the bargain bin, which it is now transforming into a “digital department store”.
Boohoo’s chief executive, John Lyttle, said the firm had spent £250m on acquisitions during the past 12 months. “Our newly acquired brands are being re-energised and made relevant for today’s consumer across a broader market demographic. We are very excited about their potential and are already seeing the early rewards from their growth,” he said.
Lyttle added that Boohoo had invested in improving the oversight and transparency of its supply chain, and that the group remained committed to sourcing clothing in the UK, including Leicester, where it is setting up a factory.
Boohoo’s supply chain, which allowed it to pivot swiftly to casualwear and pyjamas when the first lockdown began last spring, has been a strength and a weakness, said Harry Barnick, a senior analyst at the investment research firm Third Bridge.
“Boohoo now has the complex job of cleaning up its global manufacturing practises while ensuring it retains its competitive edge as the fastest and cheapest player in the market. It will need to be whiter than white in the medium-term if it is to avoid being permanently sullied by questions around its operations,” Barnick said.
WATCH: Boohoo cuts hundreds of suppliers to fashion new future after factory scandal
