Why fashion giant Boohoo has made investors 'cry into their cornflakes'

It's been a tough week for Manchester-headquartered fashion giant Boohoo after revealing it had racked up losses of more than £15m.

The group, which includes the PrettyLittleThing and Karen Millen brands, also reported a 10% drop in its revenue to £882.4m for the six months to the end of August.

In a statement, Boohoo argued that higher returns and cost-of-living pressures on customer spending had impacted its results.

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In the wake of the half-year figures becoming public, analysts were weighing in to have their say on what seems to have gone wrong at the fashion giant.

Analysts at Jefferies described the update as "disappointing" due to a lack of improvement over the latest quarter while Derren Nathan, head of research at Hargreaves Lansdown, said that investors "may well be crying into their cornflakes after a read of Boohoo's interims".

He added that profits are being "squeezed both at the top line and through higher costs and this looks set to continue".

Julie Palmer, partner at Begbies Traynor, said: "This pandemic winner fortunes have changed since it was surfing the lockdown home shopping wave.

"There has been a working conditions scandal, supply chain disruption, leadership changes and now we have the worst rate of inflation for decades and a consumer confidence crisis that shows no signs of abating. Throw in the collapsing pound and Boohoo’s input costs are only going to go up.

"Sales at the fast-fashion giant were always going to struggle against the tough comparisons but taken all together and it looks like Boohoo has somewhat fallen out of favour with the stock market.

"It will be pleased to have maintained the guidance set out in