LONDON, Sept 11 (Askume) – Online fashion retailer Boohoo (BOOH.L) said on Wednesday it would stop supplying U.S. customers through its Pennsylvania website and resume fulfilling orders from the United Kingdom. The company said the strategic shift would result in unplanned job cuts.
Boohoo shares fell 2% in early trade, widening losses to 32% through 2024, after the British company said it would stop using the distribution center by Nov. 11, just a day after it resumed operations. The company said it would lease space at the center, which will be operated by a third party.
Chief executive John Little previously described the site as an “absolute game-changer” because it would reduce delivery times for shoppers in the United States, Boohoo’s biggest overseas market.
However, the company said on Wednesday it would fulfill all U.S. orders through an automated center in Sheffield, northern England, to cut costs and expand the range of products available to American buyers in the medium term.
“To us, the short lifespan of US warehouses … is a concern and highlights the naivety of the US market and the waste of time and resources,” analysts at Shore Capital said.
Boohoo said the move would reduce its balance sheet due to investments and costs associated with the US business, as well as some exceptional cash costs. More details will be provided in its half-year results.
Analysts at Peel Hunt expect capital spending to be cut by 34 million pounds ($44.5 million).
Boohoo said it is “excited” about the opportunities in the U.S. market and is developing a comprehensive strategy to enter the market, the first of which was its recent move with Nordstrom (JWN.N).
Boohoo said it was in talks with major US brands about new market routes for the group’s other brands.
Like British peer ASOS (ASOS.L) , the company has been a winner during the pandemic, which has fueled a surge in online shopping. The company has since struggled due to supply chain issues, high product returns, competition from rivals such as Shein and weak consumer demand.
($1 = 0.7643 British pounds)
