N Brown Group plc

Good morning everybody and welcome to N Brown's interim results for the 26 weeks ended the 2nd of September 2023. I am joined by Dominic Appleton, our Chief Finance Officer. Let's turn to the agenda for today. First I'll give you an update on our highlights so far this year, then I'll hand over to Dominic who will talk you through the financial performance for the first half and the outlook and guidance for the full year. I will then return to talk in a little more detail about our KPIs and our strategic progress. After that, we will open up for Q&A. We're pleased to be reporting first half adjusted EBITDA in line with the board's expectations, which leaves us on track for the full year board and market expectations. We're doing this whilst making further strategic progress against our pillars. Following on from the launch of our new trading website to simply be customers last year, we've now successfully launched on Giacomo, which is aligned to one of our transformational priorities. We have a clear set of priorities in train for the year ahead, including the new website on the third of our strategic brands, JD Williams. As we anticipated, macroeconomic pressures have continued into FY24, with softer product revenue trends we saw from the second half of last year continuing. We retain our view that the market for discretionary products will remain under pressure in FY24, but we have seen a better product revenue trend in Q2 and a further improvement at the start of Q3. We've kept our focus on the areas which are directly under the business's control, which has allowed us to reduce absolute costs in the half despite 7 million of inflationary headwinds, and reduced stock by 20 million over last H1's position. We continue to have a strong balance sheet with total accessible liquidity of over 130 million at the end of the half, which provides a solid base for the continued investment in our priorities. I'll now hand over to Dominic to talk you through the financial results.

Thank you, Steve. Let me start with giving you a summary of the group's financial performance in the half. Overall, the continuing challenging macroeconomic conditions saw group revenue down circa £35 million, including softer product revenue and lower financial services income, with the latter reflecting the smaller customer data book from the start of the year and the softer product revenue. Adjusted gross profit margin has increased by 40 basis points, driven by the progression in the retail gross margin. I'll talk in more detail about this later. Our adjusted operating costs to sales ratio has increased in the half, driven by the anticipated inflationary impact flowing through from H2 of last year, and the impact from lower operational leverage. Against last year, we experienced headwinds on this ratio of just over two percentage points from the inflation element and just over two percentage points from the lower operational leverage. These have been partially offset through management initiatives with absolute costs circa 5 million lower. A lower gross profit driven by the lower product volumes led to an adjusted EBITDA of 17.5 million, circa 10 million lower than half one in the prior year. But in line with board expectation and leaving us on track for full year board and market expectation. Below EBITDA, we saw 7 million reduction in depreciation and amortization following last year's impairment of intangible assets. Interest costs were 1 million higher, reflecting higher utilization of the securitization facility, giving an adjusted profit before tax of 0.1 million pounds, down 4 million on the prior year. Unsecured net cash was up circa 2 million pounds on prior year at 49 million pounds. and we have generated cash of around £14 million in the half after continuing to invest in the transformation of the business. The balance sheet continues to be strong with total accessible liquidity of over £133 million at the end of the half. Finally, adjusted EPS of 0.15 pence reflects the profit performance during the half. You'll see from this slide that the majority of the EBITDA reduction has come from lower revenues across product and financial services, with the EBITDA being in line with board expectation. Product revenue has been partially offset by a better margin rate, which includes normalized freight rates and a continuation of good cost control with costs reducing by circa 5 million as we have managed volume reductions through the cost base and despite inflationary impacts of circa 7 million pounds. The context of the market and weaker UK consumer confidence continues to be important. Over the half, according to IMRG, The online pure play market reduced by 9%. Consistent with our expectations for the first half of FY24 to be particularly challenging, our H1 product revenue performance has continued from H2 of last year, as can be seen on the graph. Within this, our Q2 performance has improved by around 150 basis points over the Q1 decline. Our strategic brands performed ahead of the pure play market, contracting by 7.4%, an improvement against H2 of last year. Alongside this, we've also made further strategic progress focused on our three strategic brands, Steve will talk to later. We've seen a managed decline in heritage brands' product revenue. with this portfolio of brands being managed for value rather than growth. A lower opening debtor book position and lower product revenue during the half for FS revenue reduced 9%. So, partially mitigating the lower volumes, adjusted gross profit margin has improved, up 40 basis points versus last year. The progression is part of the strategic change in the business, where we are focused on delivering margin and profitability improvements, rather than volume growth at any cost. Looking at what has driven that. Firstly, an adverse impact from trading at circa 50 basis points from a combination of a higher mix of branded product, which is a lower margin than our own brand product, a softer women's wear performance reflecting the market, which has a higher margin than the average category margin, and a measured investment in margin along with lower full price. This has been required in a promotional environment and to support additional stock clearance activity, which is seen in our lower and cleaner stock holding position at the end of the half. Secondly, More than offsetting this, we've seen a flow-through of lower freight rates, improving gross margin by circa 100 basis points, following the drag which we saw from freight rates in prior year. Thirdly, we have claimed back a higher amount of VAT by debt relief on write-offs in financial services in the first half, largely reflective of the timing of debt sales which had taken place. We credit that to the product gross margin, as you can only reclaim it due to the benefit of being a combined retail and credit provider. This improved gross margin by circa 50 basis points. Finally, there was a circa 50 basis point adverse impact from FS margin, which largely reflects timing impacts between provisioning and write-offs following the change in payment arrangement strategy, which we flagged in FY23. With a stable level of PAs in H124, annualising against payment arrangements building in H123. Our adjusted EBITDA margin was lower in the half and not where we expect the second half of the year to perform. as I'll talk about in our guidance later. As I just talked to, adjusted gross margin improved by 40 basis points in H1, flowing through to a benefit on EBITDA margin. As I showed on the EBITDA bridge earlier, we have reduced our adjusted operating costs by circa 5 million pounds against last year, despite an inflationary headwind of 7 million pounds. This reflects flexing within the variable components of our model with the lower volumes, as well as management actions. As a result of operational gearing, with lower revenue impact in the cost ratio for our fixed costs, particularly in admin and payroll, the adjusted operating costs ratio has increased by 2.9 percentage points. driving the EBITDA margin rate. Looking at the individual areas, warehouse and fulfilment and marketing and production, have each flexed broadly in line with the lower revenues, with approximately £2 million of inflationary impact on each line being offset by higher average order values and management actions. Admin and payroll has increased by around £2 million over prior year, after inflationary impacts of £3 million and £1 million of additional expenditure as part of the transformational programme. Combined with the operational deleverage, this is the area which has seen pressure on the cost ratio. The H1 ratio of 21% of revenue is a key opportunity for us to drive improvement against going forward. We have and continue to take actions to reduce the cost ratio in H2 over H1. We expect to see more operational leverage due to H2 seasonality, and we also expect to see some easing as we annualise against high inflationary impacts in H2 of prior year. We have incurred restructuring costs in the half, reflecting management's focus on driving further cost efficiency and ensuring that the cost base is right-sized for our volumes. The majority of the charge reflects the rationalization of warehousing facilities following a review of capacity, utilization, and the operational cost base. It also includes further redundancy charges following the restructuring programme, which was initiated at the end of FY23. This slide shows how adjusted EBITDA of £17.5 million has converted to net cash generation of around £17 million before adjusting items, which is pleasing given the difficult trading conditions. Starting on the left at the top, we have seen an inflow of around 14 million pounds, driven by 12 million lower inventory in the half. On a 12-month basis against H1 of last year, this reflects reduction in inventory of around 20 million pounds, or 20%, through moderating intake and clearing of older items. Non-operational cash flows of around 16 million pounds include capital investment of £9 million as part of our ongoing transformation and interest costs. This resulted in £17 million of net cash generation before adjusting items of circa £3 million. The adjusting items relate to cash flows for restructuring costs as we right-size the cost base with around £14 million of cash generated after these outflows. I'll now walk through what that practically means in terms of our robust cash and funding positions. The three key points to highlight are, first, we had unsecured net cash of £49.1 million at the end of the half. Last year, we had unsecured net cash position of £47.2 million and £45.5 million voluntarily underdrawn on the securitisation facility, which was accessible. Combined, this reflected a figure of around £93 million. Cash reduction in the last 12 months is driven by the one-off Allianz settlement, corporate financing remaining in a strong net cash position. The second tranche of our funding is the financial services securitisation facility. Drawn funding of £308 million is well covered by customer debtor balances, with our gross debtor book being £529 million. Taking the strong corporate net cash position, together with the well-balanced FS securitisation, we have net debt of £258 million, which has increased over last year due to the Allianz settlement just mentioned, partially offset our lower borrowings, and the cash we have generated. As previously announced, post-year end, we completed the refinancing of the revolving credit facility of £75 million and the overdraft facility of £12.5 million, with both maturities now fully committed to December 2026. So, in summary, our balance sheet remains strong, including the level of cash and accessible liquidity, which is available to us, with a total accessible liquidity in excess of £130 million. Now, turning to full year outlook and guidance. We continue to expect the macroeconomic challenges of a high inflationary environment and low consumer confidence to persist throughout FY24. Building on our H1 adjusted EBITDA performance, we expect full year adjusted EBITDA to be in line with market expectation. We have slightly moderated our revenue expectations for the full year, but expect this to be offset by positive management action, resulting in marginally higher H2 EBITDA margin expectations than achieved in full year FY23. The stronger adjusted EBITDA margin rate in H2 reflects benefits from cost actions undertaken in H1 and also planned for H2, better operational leverage through normal seasonality leading to greater weighting of sales towards H2, year-on-year retail margin rate improvements with H2-24 retail gross margin similar to that achieved in H1-24. And finally, improvement in our FS margin rate driven by initiatives. As seen in H1, the previous level of depreciation and amortization reduces following the 53 million impairments of non-financial assets in FY23. The full year reduction of around 15 million pounds against FY23. The business continues to be well positioned to sell fund strategic change. with full-year investment continuing at a similar level to that seen in FY23. At the end of FY24, we expect adjusted net debt to be lower than FY23's closing position. We remain confident in our strategic direction and our digital transformation, as we focus on driving sustainable, profitable growth. And although early in the period, we are also pleased to have seen an improvement in the trading trajectory at the start of quarter three. So with that, I'll now hand you back to Steve to talk you through progress on our strategy.

Thank you, Dominic. Before I talk about the progress against the strategic pillars, I wanted to reiterate the transformational priorities which we committed to for FY24 and beyond. These are focus areas which we believe will deliver the biggest benefits and we have already seen progress against these in the half. Firstly, our financial services offer will be rebranded with the platform built and deployed to customers. Building our FS platform enables us to offer more modern credit products to our customers, allowing them greater flexibility and choice in the way they pay. Secondly, all of our strategic brands will have a new customer facing mobile first website experience. Thirdly, we will continue to embed a data culture to empower our colleagues to meaningfully engage with data, to identify and leverage analytical opportunities, which will allow us to make better informed decisions to enrich the customer experience. Fourthly, a new product information management system will be live. providing a single place to collect, manage, and enrich product data. This will ensure our customers have better product information to inform their purchases, which we expect will lead to far fewer returns for our colleagues. And finally, by the end of calendar year 2024, we will have moved to an agile way of working. Agile will transform the focus and execution of the work our colleagues will undertake, which will deliver value to our customers much faster. I'll now talk about some of the strategic highlights from the first half. We have continued to make good progress across each of our strategic pillars in the year and are executing this on a self-funded basis. Within build a differentiated brand portfolio, we have secured a number of new partnerships, each highly relevant to the positioning of our three strategic brands. During September, J.D. Williams partnered with ITV and Global as headline sponsor of My Mum, Your Dad, a primetime ITV show. This was brought to life by brand ambassador Davina McCall with the goal of driving greater brand awareness as we lead up to peak trading. Giacomo's partnership with Ladbible has paved the way for connection with where Giacomo's customers spend their time. This approach allows us to engage with our customers through social media outlets, aligning with their passion points and increasing the ability of the brand to drive more loyalty and retention. Simply be embarked on a journey of empowerment. focusing on fashionable fit with the introduction of their serious about shape campaign. With a core group of diverse affiliates to demonstrate everybody deserves fashion that fits. This message was further reaffirmed by the launch of a new podcast hosted by the influential Fleur East. Our customers are more engaged and feel emotionally connected to our brand position. which is displayed through our excellent rating on Trustpilot. Now moving on to elevate the fashion and fintech proposition. The launch of Simply V on Sainsbury's online platform during the first half and selected stores in early September marked a significant milestone in the selling of our ranges via partnerships and other retailers, providing enhanced exposure to a variety of different customer segments. Reflecting further progress within our brand proposition, Anthology, a JD Williams' own premium line, designed with an elevated approach to dressing that offers versatile quality fabrics, was launched in early September. In line with one of our transformational priorities, our new FF platform has progressed as expected through the hearth, proceeding through the initial discovery phases. Now on to transform the customer experience. As mentioned earlier, we are really pleased with the successful launch of the new website for Giacomo, which was executed in under a third of the time taken to deliver the first brand to launch, Simply Be. We look forward to replicating this success with JD Williams' new website launch later this year. A significant milestone was reached with the validation of our product information management solution, another of our transformational priorities. We remain on track for the integration of our first brand. Within WIN with our target customer, to engage our target customer in an ever challenging consumer landscape, we continue to foster close collaboration with strategic partners. By striking a balance between securing visibility to build our brand awareness and facilitating conversion in driving purchase. We have continued to integrate the capabilities of AI and machine learning into our marketing campaigns. By leveraging the data processing proficiency of AI systems, we ensure that campaigns are targeted to customers with a high probability of purchase, further streamlining our customer proposition. We continue to optimize our customer relationship management levers with an emphasis on acknowledging and rewarding our valued customers for their repeat purchases, with a focus on customer engagement. We've seen an increase in the number of customers opting into our loyalty programs. In establishing data as an asset to win, we have leveraged data-driven insights in customer lifetime value models to shape our prediction models for customer behavior, ensuring a benefit to them through a more personalized marketing approach and consistent experience. We've used this insight to send targeted online messages to customers who might benefit from using our credit proposition. We have expanded the application of Price Tagger, our in-house tool, which helps us optimally promote product using price elasticity. Price Tagger has allowed for AI-driven pricing by measuring how sensitive the demand and supply of products are to price changes. We continue to advance our prediction models to cater for seasonal trends in customer behavior and the impact this has on rate of sale, ultimately increasing our agility of price within the market space. We continue to provide a range of digital customer metrics to help track the progress of our business. Consistent with the broader market, we've seen the impact of macroeconomic challenges and customer behavior, including a rebalancing of spend between offline and online channels, and which can be seen in some of our KPIs. However, alongside this, we are reporting some mitigation through average item value growth, along with pleasing progress in our net promoter score and lower arrears. I am confident that the combination of delivering against our transformational priorities, while seeking incremental improvements in all areas of the business, will move us towards unlocking progress in more of our KPIs alongside an improvement in the macroeconomic environment. Today, I'll talk through four of the KPIs. Firstly is the number of orders, which is 18% lower than prior year. This is as a result of a combination of lower website sessions and conversion, reflecting the challenging pure play market and the unseasonable weather conditions experienced. Second, average item value rose by 6%. The impact on consumer demand of a more subdued backdrop has been partially mitigated through customers buying into more premium ranges and measured price increases. Thirdly, our arrears rates are down 0.1 percentage points against last year on a comparable basis, reflecting a resilient customer base despite cost of living pressures. And fourthly, we've seen good progress in our net promoter score, which is up three points against H1 last year and five points against full year FY23. We're pleased with the traction in a number of operational areas, including extension of cutoff for next day delivery to 11 PM. At Enbrown, we are fully committed to embedding sustainability throughout the organization. Our product ranges and our processes and continue to progress with our ESG strategy sustain. Developments in the half include responsibly sourced product, now making up 44% of our own brand clothing and home textile ranges, as we target 100% by 2030 in line with our textiles 2030 commitment. Alongside mapping our tier two supply base, we have implemented our supplier sustainability questionnaire for the first time to enable further understanding of how our suppliers are addressing the social and environmental impacts associated with their business and their industry. In continuing our commitment to increasing socioeconomic diversity and making a difference in the communities we serve, we engaged six colleagues with the Prince's Trust Mosaic Mentoring Programme. The programme aims to help students build employability skills, raise their aspirations and get excited about their futures. The colleagues mentored groups of year 10 students in lower socioeconomic areas in Greater Manchester. And as a part of our diversity, equity, inclusion and belonging policy embrace, we proudly sponsored Manchester Pride in August with colleagues taking part in the Pride parade. Despite the continued macroeconomic challenges leading to softer trading and inflationary pressures, H1 adjusted EBITDA performance was in line with the board's expectations, supported by disciplined management of areas within the business's direct control. This leaves us on track for full year expectations. We have made further progress in the half and continue to self-fund our strategic change. The clear set of priorities we have in train for the year ahead will set the business up for 2024 peak trading. We expect the macroeconomic challenges of a high inflationary environment and low consumer confidence to persist through FY24. However, good work in our teams, including more efficient stock management, has helped generate cash and further improve our liquidity position in the half, providing a solid base for the continued investment in our priorities. We'll now turn to Q&A. So if you're not already dialed in for the conference call, please do so now, and we'll take your questions in a moment. Thank you.

Thank you. Ladies and gentlemen, if you wish to ask a question at this time, please signal by pressing star 1 on your telephone keypad. And please make sure the mute function on your phone is switched off to allow your signal to reach our equipment. Again, please press star 1 to ask a question.

We will pause for just a moment to allow you to signal. And our first question comes from Clive Black from Shore Capital Markets.

Please go ahead.

Oh, yeah. Good morning, gentlemen. Thank you for the presentation and indeed for navigating the tricky waters. I've got a few, but I'll just ask two to start with and give others a chance and if necessary, come back. The first one was just a follow-up for clarity purposes on the cleanliness of the stock position at the end of H1, but perhaps more significantly, how you see working capital going through the remainder of the year, the size of your buy-in and how confident you'll be in a sound working capital position come the year end. And then secondly, just following up, Steve, on your strategic overview, I mean, we understand the magnitude of the change that you're trying to engineer in FS, but maybe just for the purpose of clarity, give us a bit more colour on what it actually means for shoppers. What will that FS transformation mean for your customer base, please? Thank you.

Sure. Thank you, Clive. Thanks for the questions. I'll cover the strategic change one first, I think, and then I'll hand over to Dominic, who's probably best to talk about how the working capital flows through the second half. But fundamentally, the financial services platform that we sort of currently operate with is hooked into a mainframe and operates on a billing cycle that is effectively a hang-up from the old catalogue days. So the first thing that we want to sort of do is make sure that the new platform is adaptable technology rather than old mainframe. And also it presents customers with an experience that reflects a sort of modern financial services experience as you deal with any financial services account. So moving away from this thing that caused that served our customers really well for a long time into something which is a more sort of modern experience that customers would expect. Following on from that, because it's built on new technology, we expect very quickly to be able to sort of build products that have our customers in mind. So there are many different types of financial services products out there. We won't go through the detail of them at this stage, but And, you know, from my perspective, a number of different options for customers to pay in lots of different ways and really creates something which enables us to use this as a way of sort of creating an experience for a customer which is seamless. And then if we build the data in a way where we understand it, I've always sort of maintained that in a digital retail, you can prioritize the customer more than you can for somebody walking into a store. So anybody walking into our shop, our digital shop, we should understand them. We should understand whether they're a size 18 or a size 16. We should understand if they're a big F on fashion or a small F on fashion. We should understand whether they like conservative colors or whether they don't look conservative colors. And we should create a seamless experience for that customer when they hit the site with some of our brilliant products. And then we should be able to then understand how they like to pay. Do they like to pay on a debit card? Do they like to pay by Apple Pay? Do they like to pay in three? Do they like to pay over a number of different ways? And that seamless experience that we create, both on the products recommendations and on the financial services recommendations, as in checkout experience, should improve the customer experience massively. And I would anticipate that launch of those new products with that level of data capability will enable this business to step forward and start to grow and i think that's the sort of key thing that we're aiming for um but it is um you know we're trying to do something big here it's not it's not we're launching a new sort of platform we're doing something big and we have high ambitions and um over the next couple of years for sure i'd like to see those um play through so if that answers that question clive i will now pass over to dominic to cover the sort of working capital trends over the sort of second half of the year.

Thanks, Clive, for your question. Absolutely, our stock is cleaner year on year. It's 20% lower, which is circa about £20 million lower year on year. But very pleased with that. How have we done it? We've done it because we've really focused on creating flexibility in our stock to buy into newness for our customers. by moderating intake and clearing through our old stock. We'll continue that process in the second half of the year. So I expect to see continuing benefits in our working capital through managing stock in that way. Good.

No, thank you. Thank you very much for those answers. Appreciate it. Thanks a lot.

We'll now move to our next question from the line of Eleonora Danny from Shore Capital. Please go ahead.

Yes, good morning, Tim. Can you hear me?

Yes, we can hear you. Nice to speak to you.

Three questions from me, please. So the first one, on the net promoter score improvement, perhaps will be worth going through the key drivers of that? The second one on the sensory collaboration, how should we think about the scale of the sales uplift going forward? And lastly, any indication of consumers taking up more credit in Q3, given the current macro environment? Thank you.

OK. I missed the second one. Can you just sort of ask me that second question again, Helen?

Yeah, just in terms of the Sainsbury's collaboration, how should we think about the scale of the sales uplift? Yes, okay, thank you.

Yeah, sure. So I'll probably cover all three of those, actually. So thanks for the questions. Net Promote Score has gone up, and it continues to go up, and we're very pleased about that. But it is a combination of a number of factors. We're certainly seeing some improvement on the delivery performance. And in fact, our measure of sort of on time in full has gone up versus this time last year. So the fact that we're sort of getting parcels to customers as they expect them is helping a lot. But actually, a number of key drivers that sit underneath that are the improvement in products and certainly some of the recent product ranges that we've launched. Anthology under JD Williams we're really, really proud about. We think it's really good quality. Our customers are buying into it. And they're also buying into some of our brands as well. So Tala is a recent launch that we've sort of launched and that's gone very well as well. So product is resonating well with customers. Delivery is improving year on year. And the experience that we're creating for our customers and our strategic brands is better. And that would be the third point, given we've launched our new website on both Simply Be and Giacomo at this stage, JD's to go next year. So we do know that the website is faster, around 20% faster than the old site from an experience perspective. And we also know that we're about sort of twice where we were on the Google Lightbox scores. So from our perspective, it's performing better as a digital platform. And customers like it. It's allowing them to go through the journey in a much faster way. And that's why we're seeing improvements in MPS. So those three factors are driving that MPS score improvement. In relation to Sainsbury's and the scale, I don't know yet. We're very excited about it. We think Sainsbury's is a brilliant business. I've personally worked in that business a number of years ago, and I think it is a genuinely customer-centric business. And I'm quite excited about the launch, particularly with Simply Be. It's already gone live on their website, and the early signs are very good. That's what I would say to that. We're only live in a few stores at this stage, and that rollout is continuing. But I don't know if I can sort of answer the question on scale until we sort of get a bit further down. So maybe that's a question we come back to either at the sort of Q3 statement or at the year end. But what I will say is that we're pleased with the launch. We're pleased with the support we're getting from Sainsbury's. And we have high hopes for it. We're excited about that partnership. And on the final point, is there any more take up on consumer credit? Well, just sort of, you know, there's a lot of things that we do in the business in relation to our sort of focus around responsible lending, particularly with the consumer duty, which we've just made lots of changes on the back of. And I think From our perspective, we feel pretty good about our financial services business. We've done a lot of work over a number of years to make sure it's in good shape for this type of regulation. And actually at an underlying level, and it is at an underlying level once you take some anomalies out, the arrears performance is actually better than it was this time last year. So our customers are performing well in the context of a cost of living crisis. And that's down to, you know, the products that we offer. It's down to the way that we sort of help customers and particularly vulnerable customers. And I'm proud of the work that team do on that. So the first point I want to make on it is that actually we've already got a lot of existing credit customers and we're not seeing particularly any change other than a favorable change in light of the cost of living crisis, which is good. In relation to your direct question around take-up and whether we're seeing any more take-up at this stage, actually we're not. I would say there's nothing significant that I would point to. I would say it's sort of business as usual for us as we are at the moment. And we're not seeing a sort of influx of additional credit applications, principally to your point around sort of cost of living crisis. So we're very happy with the credit performance at the moment. So hopefully it answers your questions, Eleonora, but the key thing is MPS. It's delivery, it's product, and it's website experience. On the second point on Sainsbury's, it's too early to say what the scale size of it is, but I'm very excited by the partnership. I think Sainsbury's is a brilliant business and I'm looking forward to seeing how that develops. And on the consumer credit side, we're very happy with the way it's managed and we're not seeing and influx of credit applications. So hopefully that covers the three points.

That's very helpful. Thank you.

Thank you. And as a reminder, to ask a question, please signal by pressing star one. We'll pause for just a moment to allow you to signal.

And we have a follow-up question from Clive Black from Shore Capital Markets.

Please go ahead.

Yeah, just one, guys, if it's okay. I just wondered, again, if you could provide a little bit of colour on how you're seeing the returns activity at the moment. Dominic touched on it in his overview, but where do you see returns at the end of H1? How do you see that progressing? And indeed, even at an industry level around things like charging and its impact on returns, it would be useful to know your thoughts. Thank you.

Yeah, well, I think... I can give you N Brown's perspective, which is at the moment we've got no plans to increase the charges in relation to any sort of returns. We see it as part of a service that we offer our customers. And actually, for our customers, given the proposition that we serve, our customers do sort of order on our credit account. They've got plenty of time to sort of go through that process. And we have the obvious benefits of the sort of double margins that sort of exist from the financial services and the product. So you know, this business is in a strong enough place not to sort of have any immediate plans there. Over time, we can obviously come back to that point, but there's no immediate plans to make any changes there. And, you know, I think our customer proposition is incredibly strong. I mean, overall on returns, we're not seeing anything that is significant. And in fact, you know, we actually have a reasonably low returns rate, which I I put down actually to the investment in technology that we have in this business. We use a lot of capability when effectively building our physical products. We have body scanners going up and down the country, taking sizes and shapes of all of our customer types. We build that into how our customer's product is fit. And we, of course, focus on the fact that we are a size and fit specialist. So the net result of that is that actually our returns rate is probably lower than the market rate. And we're very pleased that our customers like our proposition. So I suppose the key answer is, Clive, we're not seeing any discernible difference in returns.

Good work. Thanks very much, Steve.

Thanks for the question.

Thank you, and as a final reminder, to ask a question, please signal by pressing star one now.

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With this, I'd like to hand the call back over to Steve Johnson for any additional or closing remarks. Over to you, sir.

Sure. Well, listen, thank you for joining. And for those on the webcast, thank you for listening. I think, you know, the key three messages are really simple. Earnings are on track, despite the sort of challenging market conditions. In the first half, we created free cash flow, despite investing in a strategic transformation, which is significant. And actually, our strategic change is all on track. So we, as a business, are feeling relatively confident confident about the future. So with that I thank you for your time and look forward to speaking to you again soon.