Nasty Gal Owner Boohoo Plunges After Rare Cut in Guidance

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Nasty Gal Owner Boohoo Plunges After Rare Cut in Guidance
Credit: © Reuters.

By Dhirendra Tripathi

Investing.com – Boohoo stock (LON: BOOH ) slumped by almost 12% in London Thursday after the U.K.-based fast-fashion company sprang a surprise by revising its annual guidance lower.

The company behind young women-focused brand Nasty Gal is known to set stiff targets for itself and also meet them.

Boohoo blamed pandemic-related challenges and higher shipping and wage costs for its decision.

It now expects full-year sales to grow 20%-25% compared to the 25% growth it so far anticipated. Adjusted EBITDA margins are seen at 9.25% at the midpoint of the guidance range, compared to an earlier estimate of 9.75%.  

In the six months ended August 31, Boohoo’s revenue rose 20% on-year to 975.9 million pounds ($1.30 billion). Gross margin eroded by 40 basis points to 54.6% as the company had to spend more on marketing and shipping to overcome pandemic-induced tightness in the freight market.   

The company said consumer demand, which improved through August, was keeping its momentum in September as well.

Boohoo’s results compare to 9% growth in third-quarter sales at much-bigger rival H&M (ST: HMb ). The Swedish retailing giant benefited from straddling both online and offline platforms. Online sales rose 22%.

H&M said the new autumn collections have been well received and September sales were better than previous year but also warned that it was being held back by supply chain challenges.

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