Boohoo Group PLC (AIM:BOO) said it expects "pandemic-related external factors" to continue in the year ahead, although it predicted an improvement in conditions in the last six months of the year.
Revenue growth for the year to end-February 2023 is expected to be in the low-single digits, while underlying profit (adjusted EBITDA) margins are forecast to be between 4%-7%, the online fashion retailer said in a statement.
The guidance was issued alongside the London-listed company's results for the year to 28 February 2022, which showed revenues growing 14% to £1.9bn.
But underlying profit (adjusted EBITDA) was down 28% to £125mln, in line with the company's previous guidance, with performance affected by an increasing level of product returns, subdued consumer demand and international performance hampered by delivery times.
The adjusted EBITDA margin declined to 6.3% from 10% in the 2021 financial year, reflecting £60 million of pandemic-related shipping cost headwinds and investment in the launch of new brands.
Commenting on the current financial year, Boohoo noted that the first half will be tougher than the second, with higher product return rates impacting sales growth, consumer demand remaining uncertain and freight-related headwinds affecting costs. However, performance is expected to improve in the second half, with sales growth accelerating and consumer demand normalising.
The company said it will continue to focus on key areas of sourcing and freight, stock management and returns, cost management and key projects as it looks to mitigate the impact of Covid conditions on performance.
“In the year ahead we are focussed on optimising our operations through increasing flexibility within our supply chain, landing key efficiency projects and progressing strategic initiatives such as wholesale and our US distribution centre,” said chief executive John Lyttle.
Operationally, the number of active customers grew by 10% to 20mln in the 2022 financial year, with the company claiming it has “significantly increased market share in the UK and US”.
Boohoo also announced plans for a US distribution centre which will support the next phase of growth, according to the statement.