Boohoo shares have performed poorly over the last year, with the stock down 60% in the last 12 months. However, it has gained more than 31% in 2023.

With its heavily anticipated trading update set to be posted on Thursday, what can investors expect?

The fashion retailer is reporting for the four months to December 31. Of course, the Christmas period is key for retailers and is often referred to as the “golden quarter.”

But, with soaring inflation and a cost-of-living crisis at hand, Boohoo investors have a right to be cautious.

In Boohoo’s interim result back in September, the company said revenue declined 10% in the six months to 31 August. The firm cited return rates were up significantly year-on-year and ahead of pre-pandemic levels.

In addition, UK revenues declined 4%, following inflationary pressures and consumer demand was impacted by the cost of living pressures.

Crucially, these inflation pressures have not gone away. In its interim release, the online fashion retailer said it expects a similar rate of revenue decline for the remainder of the year. Not ideal…

In addition, the group also reduced its EBITDA margin expectation to between 3% and 5%, down from previous guidance of 4% and 7%.

Elsewhere, ASOS, a close competitor of Boohoo announced plans to cut office space and closures of warehouses after reporting a drop in UK sales on Thursday. ASOS’s sales declined 6%, while turnover fell 8% in the UK. There is little confidence ahead of Boohoo’s results.

So, is there anything to be positive about for Boohoo?

While not exactly positive, there are aspects that show Boohoo demand trends are improving.

For one, the group’s organic traffic is not in a bad position. Yes, it is not quite at its highs achieved in April 2020, but it has been steadily improving (despite a slight decline in recent months).

Maybe the more worrying part of the web traffic chart, if we are being picky, is the fact that traffic in the lead up to Christmas actually declined.

Out of Boohoo’s brands, boohooMAN, PrettyLittleThing, Nasty Gal, Karen Millen and MissPap, only boohooMAN and Karen Millen’s web traffic grew in the lead up to Christmas, according to Semrush.

Nevertheless, consumer sentiment (where we assess social media chatter and the latest news) has been relatively positive for the company. Although the firm faces complaints about its returns, overall sentiment is tilted positive.

Boohoo is expected to report declines in several key areas, although this looks to be priced in. As a result, any potential positives over the Christmas period may boost Boohoo’s share price.