Boohoo has announced a £91 million loss for its latest financial year as return rates climbed above pre-pandemic levels and stymied sales growth.

Revenue for the year dropped 11 per cent to £1.8 billion while operating profit fell 92 per cent to £6.9 million due to a decline in sales as well as freight, labour and higher energy costs.

Boohoo blamed lower consumer demand on the higher cost of living and longer delivery times.

Despite the poor results, shares at Boohoo increased by nearly 14 per cent as the company assured investors that the group expects to return to revenue growth in the second half of the year.

Boohoo also added that an automation project in Sheffield had resulted in the company making significant savings which Boohoo claims will help it increase efficiency and get back to growth.

"Over the last three years, the Group has achieved significant market share gains. Looking ahead, we are investing for the future growth of this business with automation, local fulfilment capacity in the US and building global brand awareness, said John Lyttle, group chief executive of Boohoo.

He added: “Our confidence in the medium-term prospects for the group remain unchanged, and as we execute on our key priorities we see a clear path to improved profitability and getting back to double digit revenue growth.”

Commenting on the news Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said that Boohoo would have a hard time turning its fortunes around given that active customers fell by 10 per cent this year: “Boohoo’s spent heavily on increasing capacity and that’s already taking its toll on profits. If this turns out to be a systemic slowdown in sales growth, not just a blip, those extra warehouses will become an even bigger problem for profits. The world of fast fashion is a competitive place, by the time the group's US distribution network becomes fully operational in 2024, its American shoppers may well have moved on.”

The figures follow disappointing accounts from Asos, which earlier this month announced a £290 million pre-tax loss following weak sales results across the six months to 28 February. Sales in the UK dropped by 10 per cent in the UK, while sales in the rest of the world declined by 12 per cent.

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