Boohoo warned on rising costs as the fast-fashion group reported a 20% drop in first-half profit.
Adjusted pretax profit for the six months to the end of August fell to £63.8m from £79.4m a year earlier as revenue rose 20% to £975.9m. Boohoo said profit fell because of rising costs such as increased marketing spending, warehouse moves and shipping expenses.
Boohoo shares fell 9.6% to 231.9p at 08:17 BST.
Revenue rose after the company snapped up brands such as Debenhams and Burton, Dorothy Perkins and Wallis from the remnants of Philip Green’s empire.
Boohoo said it expected sales to rise by 20-25% for the full year, suggesting growth of 20-30% in the second half. The rate of gross sales growth increased in September compared with the second quarter as consumer demand recovered, it said.
The company said it expected higher costs in the first half to continue along with rising freight inflation and higher wages paid to warehouse workers. The adjusted earnings margin is likely to be 9-9.5% compared with earlier guidance of 9.5-10%.
Boohoo also said capital spending would be higher than previous guidance at about £275m instead of £250m. The company said it expected pressures affecting earnings to normalise over the medium term.
Chief Executive John Lyttle said: “Entering the second half of the year, the group is well positioned to accelerate its growth and our confidence in the group’s medium-term targets remain unchanged. We will continue to invest across our platform, people and technology as we look to further cement our position as a leader in global fashion ecommerce.”
