The online fashion retailer Boohoo is making significant changes to its US operations. As part of a strategic shift aimed at achieving sustainable, profitable growth, Boohoo will cease using its distribution centre in Pennsylvania. Instead, all US orders will be fulfilled from the company’s automated distribution centre in Sheffield, United Kingdom. This decision follows a recent trial that indicated US customers valued a wider range of products over faster delivery times.
The decision to close the Pennsylvania distribution centre, which had only been operational for a year, is part of Boohoo’s broader strategy to enhance its market presence in the United States. The recent trial revealed that US consumers preferred a more extensive selection of products, previously having access to only 60% of the styles available to UK customers. By fulfilling orders from the UK, Boohoo aims to offer a broader product range to its US customers.
Despite the shutdown, Boohoo remains optimistic about its prospects in the US market. The company is actively developing routes to market strategies, which include the recent launch of the ‘Nasty Gal’ brand in Nordstrom stores. Additionally, the company is engaged in discussions with major US brands to explore new market opportunities for its other brands.
In addition to expanding its product offering, the move to fulfil US orders from the UK is expected to result in significant cost savings over the medium term. The Pennsylvania distribution centre, operated by a third party, will be sublet, and Boohoo’s operations at the site are expected to cease by November 11, 2024.
Furthermore, Boohoo is considering selling its office building located in London’s Soho district, which it acquired for £72 million in 2021. Discussions with prospective buyers for the 43,963 sq ft office block at 10 Great Pulteney Street are underway, as the group also addresses refinancing options for its sizeable £325 million debt.
Boohoo’s strategic realignment in the United States underscores its commitment to long-term, sustainable growth. By leveraging its UK distribution centre, the company aims to offer a wider range of products while reducing operational costs. This move, along with potential new market opportunities and ongoing cost reduction measures, positions Boohoo for continued success in a competitive market.
