“Elevated short-term cost headwinds experienced in the first half are expected to continue in H2 alongside recent freight inflation in our supply chain and wage inflation within our distribution centers,” Boohoo said.
In an announcement on Thursday last week, the company lowered its full-year guidance and added that it now expects its expenditure to reach $376.2 million, about $37 million higher than it had previously estimated. Aside from the wage increases, one of the reasons leading to an increase in the company’s expenditure is the planned opening of a new distribution center in North America by 2023.
In the six-month period ending August 31, the company reported adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of $115.8 million, down 5 percent compared to the same period last year. This reflects $35.3 million in additional freight and logistic costs, Reuters reported.
That being said, the company is benefiting from an increase in consumer demand, with sales in the first half increasing by 20 percent to $1.3 billion. Boohoo expects sales to increase in the 20 percent to 25 percent range over the first year, which indicates that sales in the second half will rise by 20 percent to 30 percent.
CFO Neil Catto noted that the company is in fairly good shape for staffing its distribution centers ahead of the holiday season, although it still needs to recruit another 1,000 workers in the U.K.
“We’re attracting the staff with higher wages and potentially some bonuses,” he said.
