Boohoo says the moves are the latest in a series of steps as part of the strategy to reposition the group for sustainable, profitable growth.
All US orders will be fulfilled from the automated UK distribution centre in Sheffield.
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The move follows a recent trial of increasing the product range offered to US consumers by also fulfilling from the UK, which has led to “encouraging results”, Boohoo said. Before this trial, US consumers were being offered only around 60% of the styles on sale in the UK.
The group added it “remains excited” about the opportunity in the US and has been developing wider routes-to-market strategies, the first of which is the recent launch of Nasty Gal in Nordstrom stores. The Group is also in advanced talks with major US brands with regard to new routes to market for other brands within the Group.
Boohoo warned the move will result in a write-down on the Group’s balance sheet against the investments and costs associated with the US operation as well as certain one-off exceptional cash costs.
“Importantly, these changes will result in a significant reduction in ongoing costs over the medium term,” it added, saying further details would be outlined in the half year results.
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By GlobalDataCommenting, Katie Cousins, analyst at Shore Capital said: “We have previously noted the Group’s struggle to gain traction in the US despite investing to grow market share and improve delivery times for consumers. To us, the change short life of the US warehouse (previously stated as a key pillar of growth for BOO) is concerning, highlighting a naivety of the American market, along with a waste of time and resources. However, Boohoo remains committed to broadening its product offering in the US, noting that orders will now be fulfilled by the automated UK DC in Sheffield.
“A tough US market is something that was also apparent in ASOS’ updates, and is an area we struggle to have confidence in for either Group’s growth strategy.”
