Omicron forces Boohoo shares into freefall: Fast fashion seller says sales growth will be cut in half
Boohoo has tie-ups with celebrities such as Megan Fox (pictured)
Boohoo shares crashed yesterday as it became the latest retailer to warn of the devastating impact of Omicron on sales. The fast fashion seller said its sales growth for the year ending February 28 will be cut in half by the new variant.
It was expecting sales to grow between 20 per cent and 25 per cent for the year but slashed this guidance to between 12 per cent and 14 per cent. The company warned profits would be hit as well, sending shares down 23.1 per cent, or 31.8p, to 106.05p, the lowest level for five years taking losses in 2021 to 68 per cent.
Retail analyst Clive Black of Shore Capital said if Boohoo (which has tie-ups with celebrities such as Megan Fox, whose collection Boohoo x Megan Fox was launched in October) was ‘catching a cold, other retailers will be catching the flu’. He said: ‘Omicron is a seasonal nightmare for any retailer exposed to going-out wear as with so many parties cancelled and gatherings reduced to small numbers it doesn’t need to be bought.
‘It has brought about a real and rapid change in market conditions and is a perfect storm heading into Christmas.’
On Wednesday, Currys warned that retailers were bracing for softer Christmas sales because of fears over the variant. And last week Wetherspoons boss Tim Martin said pubs would be hit hard by Omicron fears – especially as older customers stayed away.
Boohoo, which has 19m customers worldwide, said Omicron has driven the rate at which customers return clothes they buy towards 40 per cent.
Throughout lockdowns last year it was around a quarter as shoppers turned to comfy clothes to work from home in, which are more likely to fit.
But as lockdowns ended and customers geared up for Christmas parties they stocked up on dresses and other outfits. It is now grappling with a wave of returns from workers whose office Christmas parties have been cancelled.
AJ Bell investment director Russ Mould said: ‘Concerns that the Omicron variant is spreading fast do not bode well for the hospitality and leisure sector, and consumers are become more nervous about going out.
That could be bad for Boohoo’s near-term sales as there would be less of a reason to buy a new dress or shirt if that special night out has turned into yet another session on the sofa with Netflix.’