The online retailer says more people sent clothes back as consumers swapped loungewear for dresses.
Image source, Karen Millen
Boohoo has warned full-year sales and profits will miss forecasts due to higher levels of clothing returns as people swapped loungewear for dresses.
The online retailer said it had sold an “exceptionally high” proportion of dresses in the quarter to November.
A Boohoo spokeswoman said people were more likely to return expensive clothing from its brands such as Karen Millen and Coast.
It added overseas delivery delays and higher shipping costs will hit profits.
Shares in Boohoo sank 15% in reaction to the news.
Analysts at Zeus Capital also said shoppers had bought “significantly” more dresses recently compared to the relaxed clothing favoured during Covid lockdowns.
It said loungewear and active wear had “typically low return rates”.
Boohoo also said: “Recent developments surrounding the Omicron variant could pose further demand uncertainty and elevated returns rates particularly in January and February.”
The government recently issued guidance that office workers should work from home if they can amid rising cases of Covid.
Boohoo now expects its full-year underlying earnings to grow by between 6% and 7%, compared to previous forecasts of a 9-9.5% increase.
Sales are now set to grow by between 12% and 14%, far short of previous expectations of 20-25% growth.
Boohoo has expanded significantly in recent years.
It acquired Karen Millen and Coast in 2019, bought Warehouse the following year and more recently took over the brand and website of failed department store chain Debenhams.