Boohoo’s full-year revenue declined 16% to £1.2bn (£1.3bn expected), with its Youth Brands and Karen Millen divisions underperforming. However, its Debenhams division delivered revenue growth of 10% to £205mn, supported by its digital marketplace-led business model.
Net debt improved from £95.0mn to £82.7mn at year-end. Underlying cash profit (EBITDA) for the year is expected to be around £40.0mn.
Boohoo has announced plans to rebrand itself as Debenhams Group, subject to a shareholder vote on 28 March 2025. Debenhams’ strategy of connecting buyers and sellers on its platform will serve as a blueprint to revive the wider business.
The shares fell 2.1% in early trading.
Our view
Boohoo’s full-year numbers landed short of market expectations, with revenue and profits falling at double-digit rates. Continued struggles in its Karen Millen and Youth Brands segments mean that Debenhams is the only part of the business in growth territory, driven by its digital marketplace model which connects brands with Boohoo’s customer base.
In somewhat of a surprise, the group also announced a big strategy change. Boohoo plans to rebrand itself as Debenhams Group, with the name change set to be voted on in late March 2025.
Debenhams’ marketplace model will also become the blueprint for an attempted turnaround in its other struggling divisions. For context, despite only contributing around 17% of group revenue, Debenhams brought in more than half of the total cash profit (EBITDA) last year.
While Debenhams' turnaround has been impressive, we can’t help but feel like the name change is a bit unnecessary. It feels more like Boohoo has given up on trying to clean up its tainted image. Instead, it’s attempting to tap into the heritage of the iconic British brand (Debenhams). But unless management cleans up their act, history could repeat itself.
In terms of actual business performance, customer numbers were continuing to fall at the last count. Breathing life back into its Youth Brands (PrettyLittleThing, boohoo, boohooMAN) needs to be the main focus in our eyes. These brands account for the vast majority of group revenue, and with their strong social media following, have the potential to be great assets. Investment’s being focused on this area to shift the brands to a more nimble model, but only time will tell if it’s a success.
To be clear, the group remains loss-making. A nearly £40mn equity raise in 2024 means the balance sheet’s in reasonable health for now. It’s also provided some breathing room while the newly minted boss, Dan Finley, executes his strategy change.
To help stem the bleeding in the meantime, Boohoo’s trimming a lot of costs. Admin, distribution and marketing spending were all down at double-digit rates, meaning the group’s eclipsed its £125mn annual cost savings target.
Despite the pivot in strategy, our concerns about Boohoo haven’t disappeared. We’ll need to see that investments are having the desired impact, driving key customer metrics and profits trending in the right direction before we get too excited. The group's valuation has come down significantly over the last few years, reflecting the major challenges ahead. With so much uncertainty, investors should expect a bumpy ride.
Environmental, social and governance (ESG) risk
The retail industry is low/medium in terms of ESG risk but varies by subsector. Online retailers are the most exposed, as are companies based in the Asia-Pacific region. The growing demand for transparency and accountability means human rights and environmental risks within supply chains have become a key risk driver. The quality and safety of products as well as their impact on society and the environment are also important considerations.
According to Sustainalytics, Boohoo’s management of ESG risk is average.
The company's disclosure is poor, signalling inadequate accountability to investors and the public. It has some initiatives to manage risks related to material ESG issues, however, the company lacks policies and programmes in key areas. Furthermore, the company has been involved in numerous significant ESG-related controversies.
Boohoo key facts
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