Boohoo warns on profits as clothing returns surge

Boohoo has warned that full-year sales and profits will fall short of expectations following a sharp rise in people returning clothes.

The online fashion retailer also said delivery delays for overseas customers as well as higher shipping costs would hit its profits.

A Boohoo spokeswoman said returns have grown as the company acquired premium brands such as Karen Millen and Coast.

She said customers were more likely to return expensive items of clothing.

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 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.

Shares in the company slumped 15% in reaction to the news.

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.