Boohoo H1 profit falls on reduced consumer spending, investment costs

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(Reuters) -British online fashion retailer Boohoo on Wednesday reported a 33.5% drop in core earnings for the first half of the year, hurt by reduced consumer spending and cost pressures from investments in brands.

The results highlight the challenges facing the UK fast fashion sector, with both Boohoo and UK peer ASOS operating in a volatile market and struggling against competition from lower cost Chinese-founded fast fashion Shein and Chinese online retailer Temu.

Boohoo also said that it plans to raise up to 39.3 million pounds through a placing, subscription, and retail offer, with new shares to be issued at 31 pence each.

It posted an adjusted EBITDA of 20.8 million pounds ($26.4 million) in the six months ended Aug. 31, compared with 31.3 million pounds made in H1 FY24.

The company has also been grappling with tensions over its strategic review, leadership changes, and disputes with its largest shareholder, Mike Ashley-owned Frasers Group, which holds a 27% stake and is seeking greater influence despite Boohoo’s concerns over potential conflicts of interest with rival businesses.

Boohoo expects a higher gross merchandise value and a stronger adjusted EBITDA performance in the second half of the year versus the first half.

Its first-half revenue dropped 15% to 619.8 million pounds from 729.1 million pounds in the same period last year.

($1 = 0.7871 pounds)

(Reporting by Aatrayee Chatterjee in Bengaluru; Editing by Alan Barona and Shailesh Kuber)