Jan 7, 2015
Boohoo.com lowers profit outlook as discounts hit demand
Jan 7, 2015
LONDON, United Kingdom - Shares in British online fashion brand Boohoo.com plummeted by almost half on Wednesday after it warned full-year earnings would fall below forecasts due to vast industry promotions hurting sales growth.
The company, which floated on the London stock market in March, said growth had been hampered by heavy discounts across UK high streets as rivals looked to shift stock following a warm autumn season that had hit demand.
Shares in Boohoo.com, which designs, sources, markets and sells own-brand clothing, shoes and accessories through its website to a core market of 16-24 year-old consumers in the UK and globally, fell 43 percent in early trade to 21.75 pence.
The news also pulled down shares in larger rival ASOS, which fell 2.8 percent to 2,256p.
Revenue growth for the second half of the year was now expected to be in line with the 25 percent rise achieved in the four months to Dec. 31, Boohoo.com said.
The group's full-year core earnings margin is also expected to be in line with the first half at 10 percent.
"Forecasts are expected to come back materially," analysts at Investec said, pushing their pretax profit forecasts down 26 percent to 11.8 million pounds.
Before Wednesday's announcement the group was on average expected to post a full-year pretax profit of 17.3 million pounds ($26.2 million), according to Reuters data.
$1 = 0.6605 pounds
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