The gross margin of 52.5% was down 210 basis points, “as a result of inbound freight inflation”. But gross margin performance improved 210 basis points versus H2 of the prior financial year due to tighter inventory management.

Boohoo said it has “significant liquidity headroom for [its] selective investment programme with gross cash of £315 million at period end”.

The company highlighted that gross revenue before returns was up 4%, “reflecting underlying growth and ongoing improvements in average order frequency and spend per customer”, but “offset by weaker than anticipated consumer demand”.

Returns rates were up significantly year on year, and were even ahead of pre-pandemic levels.

The group’s largest market continues to be the UK, (at 62% of revenues, up from 58%), but that seems to be more about a decline internationally than growth in Britain. UK revenues declined 4% as inflationary pressures increased and consumer demand appeared dropped.  

Sales before returns actually increased on the prior half year by 12%, but the returns rate surged. Yet Boohoo added: “We are encouraged by the performance of our more recently acquired brands, continued progression made by our Debenhams digital department store, as well as the significant gains in market share achieved over the last three years.”

International revenues declined 17%, “with the proposition continuing to be impacted by extended delivery times”.

Performance in the US was below expectations, with revenue declining 29%, albeit three-year revenue growth was strong at 60%. Delivery times to the US are still an issue, “although the situation is improving slowly”.

The gross margin there was a healthy 60.2%, down from 61.5%.

Although revenues in Rest Of Europe declined 2%, the region saw a return to growth in Q2 at +5%, with an improving trend in its DTC brands and the positive benefit of its wholesale business. Growth on the pre-pandemic period three years ago was 17%, “and comfortably ahead of the broader market”.

Rest Of The World growth was 14%, driven by the success of wholesale sales to partners in the Middle East. Markets such as Australia are starting to see improvements too.

Its near-term focus is now on improving operational performance via projects such as sourcing from near-shore markets. This increased significantly in H1. Inventory levels are also leaner, with 15% fewer units in stock at the end of August than in February.

And while inflation has contributed to overhead increases “an increased focus is being placed on overhead costs”.

It added that automation in its Sheffield distribution centre has just gone live to drive “material cost savings and efficiencies”. And the US distribution centre is on track to go live in H1 of the 2023/24 financial year, “supporting a reduction in international delivery times”.

“Further progress” was also made with the Debenhams online marketplace, a new customs warehouse went live in July, with duty savings expected in H2, and a wholesale sales portal was launched, “giving greater choice and flexibility to partners, and future operational efficiencies”.

What does that all mean for the period ahead? The company said its expectation is for “a similar rate of revenue declines to persist over the remainder of the financial year” if current conditions continue.

Adjusted EBITDA margins are likely to be between 3% and 5%, compared to the previously guided range of 4% and 7%.

But despite analysts worrying about the intense competition from Chinese rival Shein

CEO John Lyttle said: “The group has seen significant gains in market share achieved across our brand portfolio, particularly in the UK where our price, product and proposition resonate strongly with customers. We have a clear plan in place to improve future profitability and financial performance, which will stand us in good stead as macro-economic headwinds ease. We remain confident in the long-term outlook.”