Boohoo shuts US distribution center, facing £34m loss

Boohoo has announced the closure of its US distribution center, which was launched in August 2023, just over a year ago. This decision is expected to result in a write-down of at least £34 million, reflecting the company's struggles to establish a foothold in the US market. The retailer, known for brands like Pretty Little Thing and Coast, will now supply US customers directly from its UK operations, specifically from its automated warehouse in Sheffield. The Pennsylvania site was initially seen as a crucial growth strategy for Boohoo, but the company has faced significant challenges in gaining traction in the US, with total US sales dropping by 29% to £177.4 million in the year ending February 28. Analysts suggest that the decision to open a US distribution center was based on outdated sales projections from three years ago when the company experienced double-digit growth. Boohoo's move to close the US facility is part of a broader strategy aimed at achieving sustainable and profitable growth. By leveraging the Sheffield warehouse, the company anticipates a reduction in ongoing costs and an expanded product offering for US customers, as the US range currently represents only about 60% of the full UK product line. Despite the potential benefits, Boohoo has warned of a significant financial impact, including a balance sheet write-down related to the US lease and one-off exceptional cash costs. The company's shares have already seen a decline of over 25% in 2024, reflecting ongoing investor concerns about its performance and future prospects.