Boohoo has warned suppliers that payments could be delayed as the fast-fashion group grapples with growing financial pressures.
The retailer, which also trades as Debenhams, wrote to some suppliers saying it was “running behind on payments” and asked how much stock they could deliver in September without receiving further payment, according to an email seen by Business Matters.
The warning comes just months after Business Matters revealed customers were waiting up to a month for refunds. Boohoo admitted at the time that refunds were taking longer to process than usual, without explaining the cause of the delays.
Last month the group secured a £175m borrowing facility, designed to stabilise its finances. However, Mike Ashley’s Frasers Group, Boohoo’s largest shareholder, criticised the deal, claiming the high interest rate of 7.3 percentage points above the Bank of England base rate meant cash was being “sucked out” of the business.
The company’s financial difficulties have intensified after annual losses nearly doubled to £348m, while sales dropped almost 20% to £790m. The group’s net assets have also collapsed to £3.9m, down from £280m a year earlier. Analysts at Shore Capital recently described Boohoo as “very constrained” amid the squeeze.
Relations between Boohoo and its suppliers have long been fraught. In 2020, the company faced criticism over poor working conditions at some factories. More recently, suppliers have accused the group of pushing down prices and withholding payments over quality disputes. Boohoo has denied wrongdoing but admitted it has sought price reductions in the past when inflationary pressures eased.
Asked to comment on the latest email, Boohoo said: “A junior colleague, in one of our smaller brands, emailed a small number of suppliers to work on capacity planning.”
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Boohoo warns suppliers of late payments as cash crisis deepens