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Promotion-heavy market led to margin slip, says Boohoo boss

Intense competition and a “high level” of promotional activity eroded Boohoo’s margin during the six months to August 31, joint chief executive Carol Kane has said.

Gross margin fell 220 basis points to 60.1% during the period, the company revealed this morning. EBITDA margin was 8.4%, down from 10.1% last year, reflecting its investment in price, promotions and marketing.

Kane, who runs the etailer with business partner Mahmud Kamani, said Boohoo had weathered a “difficult market” this summer.

“Price has been in decline in the market and we have done well in terms of our price investment compared to others. There has been a slip in the market and our pricing is in line with that. It’s very competitive out there in terms of promotions. For online businesses promotions around deliveries have been very important.”

Boohoo posted a 35% increase in sales to £90.8m for the period, which Kane said was driven by new product launches including its -size, petite and Boohoo Night partywear collections.

“We have seen growth across the board,” said Kane. “Our holiday shop did well and we saw growth in footwear, accessories and denim. Our ranges are expanding and having the right product and constant newness is bringing new customers to Boohoo, as well as driving retention.”

The trial of wholesaling Boohoo branded products to a number of UK and overseas etailers, including Asos.com, which kicked off earlier this year, was successful. It plans to add new partners later this year, but Kane insisted there is no intention of selling into bricks-and-mortar stores.

“We are doing small trials of small edits of product. We’re not disclosing details on partners at the moment, but it’s an exciting new channel for us to build our brand internationally and broaden our customer reach.” 

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