Luxury e-commerce retailers in the UK are facing significant declines in revenue, the most notable one being Boohoo, a company on track to lose its title as a billion-dollar business.
Boohoo is known for its fast-fashion business model and has a very strong online presence with over 17 million followers across platforms.
Its revenue growth stopped in 2022 at £1.98 billion. In the following fiscal years, Boohoo has seen nothing but drops, with a 17% decrease reported at the end of the 2024 fiscal year in February, going from £1.77 billion in revenue in 2023 to £1.46 billion in 2024.
The company aims to stop these losses and get back on the growth train by launching its new online marketplace that will introduce 200 new fashion, lifestyle, and beauty brands.
Boohoo’s Strategic Moves
In order to get back on track, Boohoo announced that on July 31, 2024, they’re going to launch a new marketplace introducing 200 new luxury brands in their store. The list includes Balenciaga, Gucci, Valentino, Off-White, Alexander McQueen, L’Oréal, and hundreds more.
Their new marketplace will be powered by Mirakl, an online marketplace and dropship solution. A similar company using Mirakl’s software is Boohoo-owned Debenhams, among many other massive brands in the online e-commerce and dropshipping space.
The purpose of this move by Boohoo is to diversify offerings and solidify its market position, hoping to combat rapidly rising Chinese fashion players such as Shein.
“We see a clear path to improved profitability and getting back to growth.” – CEO of Boohoo, John Lyttle.
Boohoo’s (and others’) Revenue Loss
According to StockAnalysis data, Boohoo has been growing rapidly from 2020 to 2022. However, the loss of revenue is only increasing since 2022, featuring a 10.80% loss from 2022 to 2023, and a 17.40% loss from 2023 to 2024.
When you look at the data carefully, Boohoo is still at a better financial position now than it was in 2020. However, seeing such revenue losses two years in a row may be cause for concern. Especially when you consider that similar brands such as Asos and Superdry are experiencing similar events in the past couple of years.
Key Factors Impacting These Financial Struggles
Boohoo, Asos, and Superdry are a few brands that have attempted to renegotiate debt with banks.
The CEO of Boohoo, John Lyttle says:
“Despite difficult market conditions, caused by high levels of inflation and weakened consumer demand, we made continued progress in the year.”
What are these difficult market conditions John is talking about?
One of the biggest causes for this ongoing loss of revenue is Boohoo’s supply chain scandal and intense competition with Shein, their most impactful Chinese rival.
According to their latest annual report, Boohoo’s £75m debt is due next year, with a second one of £250m approaching its deadline in 2026. Because of the thinning deadlines, Boohoo was forced to approach banks to renegotiate debt and hire advisers.
What Does This Mean for Boohoo Employees?
According to Boohoo’s annual report, the number of employees at the organization has decreased from 6190 persons in 2023 to 5079 persons in 2024, letting go of over 1000 employees in one year.
In terms of saving money, this results in the total payroll costs also decreasing from £231.7m in 2023 to £201.9m in 2024.
Boohoo’s preliminary results for the year report states:
“Operating costs of £699 million, down 16% vs FY23 driven by the actions taken under the ongoing cost savings programme.”
Final Thoughts
Those in charge at Boohoo are fairly certain that they can get back on track and successfully battle these difficult times.
Hopefully, their new online marketplace and brand partnerships are going to steer things upward.
James Blacklock, the Chief Product Officer at Boohoo, says:
“This initiative reflects our commitment to providing our customers with diverse and high-quality options, all in one convenient place. By partnering with some of the most complementary brands, we’re enhancing the shopping experience and ensuring that Boohoo.com remains a leading destination for UK consumers.”
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