Not Going Out: Omicron Wave Set To Slow Fast Fashions Profit Growth

Fast fashion retailer, Boohoo, has said a surge in customers returning going-out clothing such as dresses will potentially hit its sales and profits this year. The Group’s Coast and Karen Millen brands, acquired in 2019, sell more premium priced products and both brands are well-known for occasion-wear.

Despite an “exceptionally high” proportion of dresses being sold in the quarter to November, customers are returning them at higher rates than usual, which is being linked to the cancellation of events and gatherings in line with the latest UK government guidance. Boohoo returns rates were 12.5 percentage points higher than the same period in 2020.

The British public had little awareness of the impact of the surge of the latest Omicron variant when shoppers bought outfits for Christmas parties and events back in November; many were determined to make up for the previous year when gatherings were not permitted.

However this week, UK Chief Medical Officer, Professor Chris Whitty issued a clear public warning that for the final days to Christmas, the public should stay at home unless it ‘really matters’.

Even Her Majesty said it was “with regret” that an annual royal get-together would not be going ahead as planned – but that it was “the right thing to do” as the new Covid-19 variant spreads across the UK.


Chief Executive of Boohoo, John Lyttle said: ‘The strong performance in our core UK market, across both our established and acquired brands, demonstrates the potential to capture and grow market share in key markets.

‘In international markets, our proposition continues to be significantly impacted by ongoing service disruption due to the pandemic, which, in addition to increased recent consumer uncertainty, has weighed on our performance.’

‘The current headwinds are short term, and we expect them to soften when pandemic-related disruption begins to ease.’

Boohoo have also highlighted challenges with supply chain issues in this weeks’ announcement, with shares at the online retailer falling approximately 15% to the lowest level since 2016.

The retail industry has been rocked by global shortages of materials, rising prices and transport delays, all coinciding at a time when there has been a significant increase in demand for consumer goods.

Shoppers have faced empty shelves in supermarkets and brands like ASDA and Ikea have chartered cargo ships in a bid to take control of the issue, by-passing intermediaries.

Boohoo’s UK distribution network has allowed the brand to offer faster shipping thanks to local warehouse storage that has made it easier to deliver clothing to British consumers.

The brands distribution network has seen significant investment into automation in order to drive efficiency and cost savings. Its faster delivery times and speedy customer refunds has been a recipe for sales success.

Boohoo said UK net sales were up 32% on last year in the three months to November, reflecting “exceptional” UK demand.

“The group has gained significant market share during the pandemic. The current headwinds are short term and we expect them to soften when pandemic-related disruption begins to ease,” the Boohoo chief executive, John Lyttle, said.

The Boohoo Group includes brands such as Nasty Gal and PrettyLittleThing as well as recent acquisitions including Debenhams and Dorothy Perkins. All have experienced buoyant sales throughout the pandemic as shoppers have moved online unable to access other high street fashion brands such as Primark.

The Boohoo Group expecting freight costs to the UK to be about £20m higher this year as trade faces continued consumer uncertainty. Lengthy delivery delays and rising costs are hampering its European and overseas trade.

The Groups statement highlights a belief that “pandemic-related disruption will begin to ease” but if issues continue longer-term, the effect could be particularly hard-hitting for the Boohoo brand and indeed the rest of the retail sector.

The Tycoon Herald