Boohoo warned sales have slowed sharply and it will undershoot targets this year due to increased customer returns, supply chain issues and the Coronavirus (COVID-19) pandemic.
The fashion group cautioned in September that supply chain issues were causing problems but said today that significantly higher returns of items have also hit net sales and pushed up costs.
The supply disruption is also continuing and sales in the year to end February 2022 are now forecast to grow by 12-14% compared to previous guidance of 20-25%.
The Omicron variant might mean even this forecast is too high, with the group bracing for ‘elevated returns’ in January and February, the company said.
Profits are also suffering with margins down to 6-7% compared to previous guidance of 9-9.5%, meaning underlying profits this year will now be in a range of £117mln-139mln.
Higher returns and associated costs were again blamed alongside extended delivery times, with transport cost inflation expected to result in a £20mln hit to profits.
Inbound and outbound freight costs had risen by £65mln, it said, while integrating recent acquisitions such as Debenhams will cost a further £10mln.
One-off costs of a new warehouse and rebranding will also be higher than forecast at £33mln.
John Lyttle, chief executive, insisted the problems were short-term in nature and would ease.
“We expect them to soften when pandemic related disruption begins to ease. Looking ahead, we are encouraged by the strong performance in the UK, which clearly validates the boohoo model. “