British online fashion retailer Boohoo reported a halving of annual core earnings as shoppers were hit by a cost-of-living crisis and many returned to physical stores post-pandemic.

Boohoo and rival Asos grew rapidly as 20-somethings around the world snapped up their fast fashions, and demand surged again during the pandemic when high street rivals were shuttered by lockdowns.

But supply chain issues, higher product returns, competition from rivals like Shein and rapidly rising living costs have hit them hard.

Boohoo said on Tuesday it made adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), its key profit measure, of £63.3 million ($79.9 million) in the year to Feb. 28, slightly ahead of analysts’ consensus forecast of £62.1 million but down from the £125.1 million made in 2021-22.

Revenue fell 11 percent to £1.77 billion.

Boohoo does, however, expect an improved performance in its new financial year.

It forecast 2023/24 revenue would be flat to down 5 percent, with a focus on profitable sales, and adjusted EBITDA would rise to between £69 million and £78 million, in line with market expectations.

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

Boohoo has taken action to cut costs, such as reducing the level of stock it holds, and is increasing automation.

It is also investing in key projects, such as a distribution centre in the United States, which it says will drive a “step change” in its offer there.

Its new financial year should also benefit from the easing of supply chain disruption and lower freight rates.

For the medium term, Boohoo is targeting a 6 percent to 8 percent adjusted EBITDA margin, up from the forecast 4 percent to 4.5 percent for 2023/24.

The group also said it ended the year with £331 million of liquidity headroom.

Last week Asos, which overhauled its business model last year, reported a first half loss and forecast a further decline in sales, hammering its shares.

Shares in Boohoo are down 53 percent over the past year.

By James Davey; Editors: Sarah Young, Kate Holton and Sonali Paul

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