Boohoo targets 'step-change' in U.S. fortunes with new warehouse

By James Davey

LONDON (Reuters) - Struggling British online fashion retailer Boohoo said this year's opening of a first distribution centre in the United States has the potential to transform its fortunes in that market as it will slash delivery times to American shoppers.

Currently, orders placed in the United States, Boohoo's largest overseas market, are picked and packed in the United Kingdom then sent by plane to the United States, with delivery taking eight to 10 days.

"Once we're up and running in the U.S., 95% of the U.S. we will cover in three days," Boohoo CEO John Lyttle told Reuters in an interview on Tuesday.

"It's a complete gamechanger for us," he said.

The warehouse in Elizabethtown, Pennsylvania, will open in late northern hemisphere summer, with the PrettyLittleThing brand, Boohoo's most popular in the United States, the first to go live.

A second brand will follow before the peak Christmas trading period, with Boohoo's other brands following in late spring and early summer 2024.

Boohoo made U.S. sales of about $400 million in its 2022/23 financial year.

"We've got lots of opportunity there," said Lyttle.

He was speaking after Boohoo forecast a better performance in its new financial year after profit halved in 2022/23 when shoppers were hit by a cost-of-living crisis and many returned to physical stores post-pandemic.

Shares in Boohoo were up 9% in late morning trading, paring losses over the last year to 47%.

Boohoo expects sales to fall by 10% to 15% in the first half, before a return to growth in the second half.

"We see that growth coming back towards the end of this summer as we get into the first normalised trading period in (over) three years," Lyttle said.

He noted that 2020 and 2021 were COVID years with trade skewed to athleisure wear, while trade in 2022 was skewed to occasion wear with post-COVID pent-up demand for events such as weddings.

(Reporting by James Davey; Editing by Emelia Sithole-Matarise)