British online fashion retailer Boohoo reported a 28 percent fall in annual core earnings that reflected significant freight and logistics cost inflation and warned that pandemic-related external factors will continue to impact it this year.

The group said on Wednesday it made adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of £125 million ($156 million) in the year to Feb. 28 — in line with guidance and down from £173.6 million in 2020-21.

Revenue rose 14 percent to £1.98 billion.

Boohoo, which sells clothing, shoes, accessories and beauty products aimed at 16 to 40-year olds, had warned on annual profit in December, blaming a spike in product return rates, disruption to international deliveries and higher inbound freight costs.

For the 2022-23 year the group forecast “low-single digits” revenue percentage growth and adjusted EBITDA margin of 4 percent to 7 percent, versus 6.3 percent in 2021-22, as it expects to continue to be hit by pandemic-related factors that negatively impact costs within its supply chain.

It forecast revenue growth to be broadly flat in the first half of 2022-23 as relatively higher product returns rates lead to net sales being down year on year in the first quarter, with a return to growth in the second quarter. Performance is expected to improve in the second half of the year.

Boohoo said it would focus on retaining the market share gains it has made over the course of the last two years.

It intends to maximise efficiencies in its operating model and mitigate where possible before passing prices onto consumers.

Prior to Wednesday’s update analysts were on average forecasting EBITDA of £136.4 million for 2022-23.

By James Davey; Editors: Kate Holton and Louise Heavens

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