Boohoo Grp Plc Unsp/Adr

Hi, guys. Thanks for coming. As you can see, the results are OK. We keep trying our best. It's tough out there, but we'll keep going and we'll keep battling on. You heard the news last week about the new CEO. Let me assure you, me and Carol are going nowhere. Can you imagine me leaving? I don't have another life, so you've got me for a long time to come and Carol. That's really all that I've got to say. I'll pass you over to Neil and Carol, and I hope they don't tell you too much.

Thanks, Mahmood. Good morning, everyone. And thanks for coming to our half-year results presentation. I'm really excited about taking you through these results. And you'll see from the financials that we've achieved so much in the last six months. And there's been lots of exciting developments across the group. And Carol will take you through the highlights in a few minutes. Then I'll resume to talk about warehousing and CapEx and what that means in terms of guidance and outlook for the rest of the year and beyond. so here's the income statement and you can see that it shows excellent progress right across our p l and once again we're reporting record sales and profits our own brand multi-brand approach continues to work incredibly well and it's driving exceptionally high levels of profitable growth in market conditions that are proving challenging for many others Revenues increased to £395 million. That's up 50% on last year. All of our brands gained market share in all of their target markets. And as a group, we continue to make excellent progress towards our goal of leading the young online fashion space. We continue to achieve this high level of growth in a profitable manner with gross margins at 55.3% and that's up 200 basis points on last year. The first quarter was the first time we've ever reported a year-on-year increase in gross margin and we've been able to build on that aided by a really strong performance at Boohoo which continued to see an improving trend throughout the half as we reduced markdown and increased full price sell-through with a less promotional stance. And the increase in gross margin at the group level is testament to the strength of all of our brands as we enter the second half of the year. With that improved gross margin, we generated adjusted EBITDA of £39.6 million, and that was ahead of expectations, up 43% on last year. The EBITDA margin was very healthy at 10%, and at the same time, we've been able to make investments in other areas to improve our customer proposition. And those improvements will lay the foundations to increase the lifetime value of our customers in the future. Adjusting items totaled £11.1 million in the first half, and that was split between amortisation of acquired intangibles and share-based payments, which you're familiar with, as well as £6.4 million of exceptional costs relating to Pretty Little Things warehouse move. We're really pleased to announce that this move has been completed on time, and the total exceptional cost is expected to remain within our original estimates of between five and eight million pounds. The bulk of that has been incurred in the first half of the year. You can also see on this slide that there's been very strong conversion of our profits into cash, and we finished the half with £156 million of net cash on the balance sheet. So all in all, a fantastic set of results that we're particularly pleasing given the warehouse move and the ongoing investments that we're making into our infrastructure and customer proposition. Moving on to... Look at our sales by brand and geographical segment. Group revenues of £395 million were up 50% on last year, or 49% on a constant currency basis. At the brand level, Boohoo has seen continued strong organic growth. Sales of £209 million were up 15% year on year. As expected, the brand's growth rate picked up in Q2, delivering 17% net sales growth, along with continued gross margin improvement. Boohoo's performed well internationally, particularly in Europe, and continues to see strong growth in all of our key markets. Pretty Little Thing, or PLT, continues to perform ahead of expectations. It's delivered another period of triple digit growth with sales of £169 million, up 132%, with growth very strong in all of its key markets. That performance is all the more remarkable when you factor in the challenges and disruption that it faced with its warehouse move over the summer, and it's a credit to the team at PLT that they've been able to manage those operational challenges and deliver such strong growth at the same time. Nasty Gal continues to make progress. Its product proposition has developed further with sales of £17.7 million, up 111%, and performance continues to be strong in the US as well as in its international markets. So in summary, multiple brands taking market share in multiple geographies. That's exactly what we want to achieve with the multi-brand approach. And we're delighted with how this strategy is working and the ability it gives us to grow more rapidly as a group and take more and more market share. So moving on to talk about the cost base, the main point I'd like to bring out here is that we continue to consistently leverage our central costs. In the first half of this year, other admin costs decreased a further 140 basis points to 13.2% of sales. But we're still able to invest in the right areas as the cost line in absolute terms increased by £14 million compared to the same period last year. So you can see that over the last three years, we've gained over four percentage points of leverage from our central costs. And that's enabled us to invest in growing brand awareness and entering new markets, developing new product ranges, developing new brands like Boohoo Man. improving our delivery proposition and many other aspects of the customer proposition, whilst at the same time delivering market-leading growth and great EBITDA margins. And we expect this leverage to continue and support our future growth. Distribution costs at 23.2% of sales have risen from a combination of brand and international mix and service investments that we've made to improve the customer proposition. And those improvements enable us to remain competitive in all of our focus markets. Marketing costs at 9.9% of sales are up year on year as we've made significant and targeted investments into all of our brands to raise awareness in key markets and new international markets. And Carol will cover that in her presentation, but it's delivered some really encouraging results for us as we enter the second half of the year with momentum. The next slide shows what we believe to be a real strength within our business, which is the flexibility that we have to invest across our cost base and allocate capital accordingly. What the chart shows is the progression of our gross margins and marketing costs as a percentage of sales over the last 12 months, and how we allocate capital, prioritize our investments for growth, and we've been able to flex those accordingly. So it shows that the investments we've made in marketing and raising awareness have strengthened all of our brands, and this has been done with great success. At the same time, we've focused on full price sell-through, reducing markdown, and more effective promotions, driving the improved gross margin performance that we've seen throughout the first half of the year. So this approach has delivered particularly pleasing results as we start the second half of the year with increased brand awareness, strong sales momentum and a significantly higher gross margin than last year. So we feel like we've got a lot of firepower in the run-up to and over the peak winter period, which as we know is a period of intense competition and discounting nowadays. Moving on to the cash flow statement, we finished the period with net cash of £156 million, up £36 million on 12 months ago, and up £23 million since our last year end. Operating cash flow of £55.7 million represented a 69% increase on last year, thanks to our negative net working capital cycle. Capital expenditure in the six months was £31 million up £11 million year on year and that reflects our ongoing investments in infrastructure and operations. Our distribution centre in Burnley is currently receiving a significant proportion of this spend as we begin to ramp up our automation project which is on track to go live in 2019. So even with those high levels of investment, free cash flows remain strong at £24.5 million as we continue to make progress in creating a distribution network capable of supporting £3 billion of net sales globally. The KPIs on this slide show that we're making excellent progress as a group and moving in the right direction with significant gains in customer penetration and engagement. The table shows unique customers at the group level to account for shoppers who spend with more than one of our brands. With the multi-brand strategy, we're engaging with more customers who shop with us more frequently and spend more on each purchase. So the strategy is working really well. It's increasing our penetration and share of wallet as well as increasing the number of customers shopping across the brands. And you can see that with a 35% increase in customer numbers and a 14% increase in the sales per active customer year over year. So in summary, it's been a great first half. And we're really pleased with the progress that all of the brands have made. And we continue to demonstrate the significant potential that each one of the brands has in their respective focus markets and beyond. And on that note, I'd like to hand over to Carol now, who's going to talk you through some of the significant business developments that have happened in the last six months. Thanks.

So thank you, Neil. Good morning, everybody. As you can see from the update, we've achieved rather a lot in the last six months. Another set of excellent results from the group with record sales and profits. We've achieved so much operation in the first half, especially around infrastructure. I know that Neil's going to cover this in detail in his next section. But I'd like to update you on what we've been doing across all the brands. And as always, we continue to create engaging content that resonates with all our customers. And in addition to our regular day-to-day marketing, we've been investing in some major collaborations in the last six months. All of this is underpinned, of course, by our fantastic online on-trend product, our amazing prices and great customer service. So just to give you a flavor of what we've been up to, as always from Carol, I'm going to have a short video. And it's really showcasing some of those really vibrant campaigns that we've had across the summer and many of the highlights that Neil's talked you through. Thank you, video. As the video says, that's our latest tune for the year, as we are really becoming that force to be reckoned with. I'll just go on to the next slide. So as Neil talked about, there's an awful lot of flexibility that exists in our model, in our cost base. And we've been able to really work to our strengths to invest some of that with some of the growth in the first half. Our stronger gross margins allowed us to reinvest these gains across the business. But marketing is just one of the channels where we've really been accelerating our spend. Key investments have been about raising the brand awareness across all our brands, across all our territories. And we've done this working with celebrities, designers, models, footballers, and influencers, which you can all see over the next few slides. So for Boohoo, Zendaya was the big one that we kicked off right at the start of the year. For those of you familiar, she's an American actress and singer, huge fan base, giving us a really big exposure in the US market, really raising our profile there. And she has enormous social following of over 52 million on Instagram. It was a true collaboration with Zendaya. She was involved right from design to signing off all the imagery that was available on site. It was truly a good match for us. And a really inclusive collection now in Boo, who I always talk about, our inclusivity. So we took the sizes from 8 to 24 in this collection, covering off everything from jeans to dresses to going out to... Everything you can imagine. And as you see on the screen, they're a lovely statement girl jacket, which I love. I own that jacket. It's very nice. And similarly, more recently, as we went into the summer, we did a collaboration with Paris Hilton. great appeal across the US and Europe, very nostalgic with a nod back to the noughties. I'm sure many of you in the room do know who Paris Hilton is, unlike some of the influencers I do mention. But a great range of glamorous evening wear and some of that glamour injected into some of the casual wear that she did for us. It was all very much centred around Paris' personal style, even included a little print of her little dog called Diamond Baby on a T-shirt and lounge set. We've also been working, you see on the previous slide, there was a Mickey Mouse jacket there. So we've been working with licensed brands, Disney being one of them, putting Mickey and Minnie onto some really cool fashion shapes because Disney is now for grownups. It's not just for children. And you're never too old to wear a Mickey Mouse T-shirt. I have several in my wardrobe. And he turns 90 this November, so there'll be a bit of a thing around Mickey Mouse. Well, I'm sure we've got those T-shirts in production as we speak. And of course, our Boohoo Man. Now, you've seen loads of this stuff out there on the tubes and whatever. But this is just one of our many collaborations. And I brought out Dele Alli because I know he's the one that has been the real hit this year. And you're all very familiar with him. Inspiring admiration, the nation, as they say. Fantastic partnership for Boohoo Man. Brilliant timing. The execution, and there was just such a lot of noise and PR off the back of it around the World Cup. And pretty little thing. Well, we've had our Carl Carney collection. Carl Carney is a hip-hop, urban fashion pioneer of the 90s. Teamed up with our design team over at PLT, developed a range of streetwear, quite a departure for the PLT brand. And using such a cool, high-profile US designer, the sales were absolutely fantastic. The range flew out. Some styles went in the first day, flew out in days. There's a second one in the plan. Really, really good collab. And just this week, for those of you who are following Pretty Little Thing, you would have noticed that we've just launched a plus-size collection. Everybody in PLT is the strap line. Now, we say everybody for PLT because this range goes from size 4 to size 28 UK sizes. And we've done that with an American model. She's here on my right, Ashley Graham. She's really quite a big deal, Ashley Graham. She's appeared on all the front covers. You can imagine Vogue, Harper's. Glamour Magazine Elle. Over 7 million followers. She's on Instagram. And she's our bold, beautiful body activist. She's making waves in the fashion industry as we speak. And it's just a fabulous alignment for the Pretty Little Thing brand. And finally, our Nasty Gal collaborations. They're all designed to reflect a cooler, more casual, edgy, Cali vibe. The brand is still very much looking to its vintage roots when it's choosing the collaborations. So here we have, from left to right, Anais Gallagher. She's model, activist, daughter of Noel Gallagher. She fronted our festival collection. Emily Louise Connolly in the middle is a British model. She's a perfect muse for Nasty Gal, collaborated on our high summer collections. Very inspired vintage pieces, ranges of denim, float dresses, and some of the coolest t-shirts you'd ever want to wear. And most recently, we launched a new collection with our model here, Chloe Lloyd, as we move into autumn. So it's our city collection, cool denim pieces with animal prints, spoiler suits, Bowie, Bob Dylan t-shirts. Again, all very vintage, but all softened with soft floaty dresses and skirts. So fashion and fast fashion, it does sit at the heart of everything we do. From predicting and spotting the latest trends to backing those trends our customers have to have and want to wear and they want it right now. We're always investing and looking at new ways to speed up every process, from designing to buying to lead times with our factories, the time it takes to shoot our collections and publish all of those images on the website. And we're doing all of this in just a few short weeks. And to do all this well, without any sacrifice to quality, our growth has been mirrored by the supply base as we continue to invest in our growing supply base globally. It's a global supply chain. We've partnered with teams around the world, and we have our own teams in situ in many offices now around the world, ensuring all our factories adhere to all the compliance standards we have. And as we continue to scale up those capacities globally, we're also speeding up all our approval processes, shipping times, ensuring that we go from design to online in a matter of weeks. We're determined that we're now well positioned to not let our growth slow us down and we just want to continue to get faster. So I think this slide pretty much demonstrates this really well. Just looking at two home pages here, left to right, just a few weeks apart. On the left, you can see there's a flavor of what we look like coming out of July and into August. And then a few weeks later here, just on the right, you'll see, it's the launch of our Do Your Thing campaign, but you'll see those early transitional pieces as we moved into mid-August. And now if you actually went online to see, you'll see what's covered in knitwear and coats and everything else that's appropriate for autumn. The message I want you to take away from this is the speed and the relevancy that our brands have in a matter of weeks, how we're ever changing our proposition. So as we go from swim to holiday wear to knits and fur coats in just weeks without a huge summer sale and a huge markdown. And really, I think that's the message I'd like you to take away from this. So not only is our marketing really targeted, so is our product. And product is our DNA. That's what we've grown up with, spotting trends and reacting quickly. This summer, we saw the return of the 90s cycling short. I was hoping that was a trend that would never reemerge. Then I had to think about it. I wore it back in 92, 93, regrettably. But when I listened to the young people audience we have working for us it was the first time for them And I remember them coming in and saying, these are fabulous. We need to do this. And I was like, really? Again? But, you know, biggest fashion this summer. You know, could not believe it. It was right across the brands. We really backed it. And, you know, more recently, just on reacting to trends, we've capitalized on the animal trend, on the fur coats, on the tartans, on the corduroy, everything that you're seeing online today. So speed, the ability to transition seamlessly between seasons and react to emerging trends makes us remain relevant to all our customers all of the time. So bringing all of this together, where do we stand in the global context? Well, we're still small. The opportunity ahead of us is absolutely huge. That's what drives us. That's what excites us. We're becoming increasingly international, circa 40% across our brands. Our international sales outside the UK cross our brands. And obviously, we plan that to increase in the coming years. In our focus markets, we're delivering growth rates that are significantly ahead of what the wider sector is achieving. And in our overseas markets, Europe and the US, we're still small in terms of share, as you can see here on the graph, but we've barely scratched the surface. So a lot to work towards there and really exciting times ahead. And what really excites us about the potential of our brands is looking at our traffic today. We can clearly see the share gains being made attracting customers and eyeballs across all our websites globally. But just looking at this graph, you can see the growth in the U.S. as we build up our brand awareness. And looking at the Hitwise data, our traffic is now at 1.2% in the US. That was 0.5% just a year ago. And as a group, that's collectively all our brands together. That puts us in seventh place in the US. We were in 36th place 12 months ago. So it's also encouraging that our formula that we are deploying through all our marketing strategy and our brand awareness campaigns and all that stuff I've just talked about with collaborations, it is working as we start to grow our market share overseas. And we saw what happened in the UK four or five years ago as we built up that brand awareness. We saw our visits going up and us taking market share. And we're seeing a duplication of that strategy now in new territories. So, well, what do we have to attribute this traffic to? Well, it's our multi-brand strategy, as Neil talks about, strong proposition, leading prices, key marketing campaigns, collaborations, and of course, the huge social reach that we have across our brands in the first half. So, it's been busy. Our product proposition has been the strongest in the group's history. I'm very proud to say that this morning. Our campaigns are industry leading. And of course, we're supported by incredible prices. And our websites are just looking stronger than ever. Our service to our customers is getting better and better globally as we continue to invest. This morning, I'm ending on this side. Hashtag do your thing. It's the name of our latest campaign. It's very much part of the DNA brand, of the Boohoo brand. And as you all know, because Mahmoud mentioned it earlier and you read all the press in the last few weeks, we have a new CEO in the next calendar year. We're all very excited about John's arrival. And he's helping us take all the brands forward. Now I say us. As Mahmood and I, as Mahmood just said, will remain very much part of this new and continuous journey. For those of you who may have thought in the room, and I doubt you would, but just in case, that Carol will be off doing her own thing, well, you don't get rid of me that easily. I am still around. I have no plans to do anything else, so I'm very much still going to be part of the team. And I'll play an integral role in supporting all the Buhu Brands the management as we enter into this new growth phase. So feel rest assured you will all see me next time. I'm still around and with that I'd like to say thank you and I'm going to hand you back to Neil.

Thanks Carol. So I'd just like to wrap up with a reminder of our current plans for warehousing and capital expenditure as we invest ahead of the curve and capitalise on the opportunities that we believe we have. And then I'd like to take you through what all of the things that we've talked about today mean for our guidance for the rest of the year. Since we talked to you at our full year of results back in April, we've successfully relocated PLT's warehousing operations to a 600,000 square foot facility in Sheffield. And that move was completed on time and well ahead of the peak trading period to come. The facility in Sheffield adds significant capacity from day one and we believe it gives PLT sufficient headroom for growth over the medium term with potential for developing approximately £1.2 billion of net sale capacity by adding mezzanine levels in due course. At Burnley, our warehouse extension is complete and the automation project is entering the final stages. Once live, we'd expect to have a capacity to generate £1.2 billion of net sales from Burnley as well. The automation should also drive material efficiencies and strengthen our customer proposition. So in aggregate, these two facilities have the potential to deliver capacity comfortably ahead of our growth curve and go a long way towards providing the group with a network capable of generating three billion pounds of sales globally. In addition, we continue to explore other options so that we can add capacity in a manner that means we retain a highly competitive customer proposition in all of our key markets. So with all of our programmes on track, our CAPEX guidance is unchanged. Spend continues to be weighted towards financial year 20 and financial year 21, and we expect to spend £50 million to £60 million this year, £80 million to £90 million in financial year 20, and £90 to £100 million in FY21. On current plans, we'd expect to remain free cash flow positive in each year during this period, whilst adding capacity that's comfortably ahead of the curve. So on to guidance and outlook. It's been a great first half with growth re-accelerating at Boohoo, PLT continuing to outperform, and Nasty Gal gaining traction in the US and overseas markets. So we now expect group sales to be between 38% and 43% for the full year, up from our previous guidance of 35% to 40%. That reflects the strong first half performance and is ahead of our medium term guidance of 25% sales growth per annum. We expect adjusted EBITDA margins for this year to be between 9% and 10% as we continue to make investments in Nasty Gal and Boohoo Man, as well as reinvesting in our proposition with the other brands, all of which we believe will underpin future growth. Underlying depreciation and amortization should be between £9 million and £11 million. The group's effective tax rate will be in the region of 18% to 19%, and adjusting items of approximately £17 million split between share-based payment expense of £5 million, amortization of acquired intangibles of £4 million, and £7 to £8 million of exceptional items from PLT's warehouse relocation. So to summarize, I think the opportunity is significant for all of our brands. We've never been more excited about their potential. We continue to make record levels of investment, and we've made great progress with these investments in the first half of the year. And we believe these will leave us well positioned to take profitable market share in the second half of the year. And beyond this year, we intend to continue to take market share in the online fashion space by investing significantly into our brands, our operations and infrastructure, and using gains such as overhead leverage or efficiencies from automation to keep driving profitable growth. So with that, I'd like to open the meeting up for questions, if you have any. Thanks.

Hi there, Ben Hunt from Investec. I'm just trying to get an idea of this pickup in the Boohoo brand performance over half in Q2, obviously both at the sales and the margin level. To what extent do you think there was maybe a benefit from there being disruption at PLT with the warehouse move in July and some of that unfulfilled demand moving back to the Boohoo brand? Or was it maybe a case of redeploying some of the marketing from PLT back into the Boohoo brand?

Well, I think you can see from the PLT's numbers that the disruption didn't impact it that majorly at all. So PLT kept a strong gross margin through the period. But really, the demand was there the whole time. Even though it was using some of the levers to pull back demand, it didn't really happen. The demand was there, and it fulfilled it. And there wasn't that much disruption there. So from that point of view, we didn't really see an impact in Boohoo. I think Boohoo's improvements have been largely around getting the product really right and investing in marketing and letting people know that Our product was great for the season. And so there were lots of other factors in that. So we can't pinpoint it to PLT pulling back and Boohoo benefiting from that, really.

Thank you. Thank you, David Gardner, Morgan Stanley. On Nasty Gal, the margins have come down quite significantly. How should we think about those margins longer term going forward?

I think the Nasty Gal gross margin was exceptionally high when we just started, launched the brand in the first half of last year. So I think of Nasty Gal gross margins being in the region that we've seen. What you've also seen with Nasty Gal is there's a slightly lower gross margin in the UK and that's become a slightly higher proportion of the mix. So international mix could change that going forward. But at the moment, I think it's in... in a place that we're pretty comfortable with.

I'm John Stevenson at Pill Hunt. A couple of questions, please. First up on Boohoo Man. Clearly, you know, getting a lot of benefit from the marketing. It's clearly a lot of growth. Can maybe talk a little bit about how the performance has been in terms of growth, scale of the business, and sort of KPIs you're delivering, you know, qualitatively if not quantitatively. And then just looking at the distribution cost to sales in the warehouse. I don't know if you could talk about to the extent that's been service investment versus sort of the warehouse changes. And leading on from that, you know, the pit cost, I guess, started to build last year at a peak. Maybe talk about where it is now compared to last year and where it will be post-automation.

Yeah, so, I mean, at Boohoo Man, we're really pleased with the performance. We don't disclose the level of sales and the KPIs for Boohoo Man, and it's a little bit complicated because you've got menswear sales on boohoo.com as well as the website itself. But simply put, qualitatively, we're really happy with the way it's performing. You can probably see that. You see the marketing in lots of different places, and hopefully you're seeing people more and more wearing, items with a boohoo man logo on it even though most of their their items don't have logos on it so you can see that it's it's doing really well growing rapidly and and we're building that brand and investing in that and that that's what we're able to do at the same time as the other brands are generating decent margins so um distribution costs in the warehouse in the in the first half of the year the investment there has been mainly around faster deliveries and better returns service and and again that's a complicated picture across lots of different countries uh we we offer free returns in our focus markets uh now apart from australia but um uh that that's what you've seen there that investment in distribution costs in terms of efficiency there's a lot to do in the second half of the year plt needs to get up to uh full efficiency in sheffield uh but generally we're we're seeing that we've made investments in in there in those elements of the service that have helped us. But we'd expect to see it in a similar area subject to getting as efficient as possible.

So you're saying that the pit cost is going to be sort of similar overall, blended?

Yeah, I mean, Boohoo at the moment is in quite a good place because it's got the expanded facility now. PLT has moved out. And PLT has got some factors in its favour in that it's got a nice... amount of capacity and a single level layout. But there's a lot to do to get up to efficiency in Sheffield. So all things being level year on year, I'd expect it to be consistent with what we saw last year.

Yeah, thanks. Matthew McEachern from N Plus One Singer. Could we just go back to the comment on the investment and delivery options and faster delivery? Because I think during the period you did experience some issues with next day delivery service. Could you just help us understand if that has now been resolved and if you felt that actually cost you anything meaningful during the period?

So that was around the PLT warehouse move. And I don't think we've suffered any adverse reaction to that, which I think demonstrates the strength of the brand that PLT has. And I think communication with customers during the period was good. So that's helped there. And as far as Boohoo is concerned, no significant impact. And we've seen more and more next day deliveries in the first six months of the year. So people are obviously appreciating that part of the proposition.

Thanks. And then I think you've trialled a pay later operation in the Australian market. Is there any feedback you can give in relation to uptake, penetration rates, or whether or not that's something that you might roll out?

We can't give you any specific numbers, but I think what you find is when you've got... options, payment options are a key part of any market. So if you get the options that customers are using and want to use, then it definitely helps. And we've seen that in Australia, that getting the proposition in terms of payment options and every other option is key. Okay, thank you.

Good morning. Caroline Gulliver from Jefferies. A couple of questions about your new chief executive joining next year. I know it's very early days. Just wondering if you could give us any more colour on how the three of you probably plan to work together. And secondly, you've got quite a sort of, you know, you're doing a lot of work on infrastructure at the moment. Obviously, his background is infrastructure and international rollout. Is that likely to change your CapEx plan over the next two to three years?

I think for the first 12 months, it's very much going to be about us working as a trio for definite, full-time, all full-time executives. What we've actually said is we'll be in, you know, John will be in every one of our meetings and then we'll be in every one of his meetings. But kind of that's how it's going to work. I would say, obviously, Mahmood's role is changing as well and my role is changing. But probably I would be there as a supporter on the brand and the product and the DNA. And I think it's very important. As a trio, we can work well together. We haven't come to this decision very lightly. And it has taken some time to make this decision and get comfortable with it for all of us. But we feel that we have a great relationship being able to sit in a room and be able to work through strategy together. And there is so much to do. When we were joint CEOs, when we IPO'd this business, we had one brand. Now we have four. We weren't very international. Now we're quite international. And it's just a huge big job ahead. And we've all got skill sets that cross over, but we've actually all indexed in different areas as well, very well. So I see, you know, I see as Mahmood and I have worked as joint CEOs, we know how to share, we know our areas of strength. And I'm sure that will just continue when John comes on board. We'll all index in areas where we perform best.

And then any likely change to the CapEx? It's very difficult to say at this point.

I don't think there'll be any changes in the next couple of years. What we've got in that CapEx guidance is enough investment for lots of different options that we'll have available. And I think when John takes a look at it, he'll... We're actually at a great point in time where decisions need to be made in the next 12 months, really. And so he'll be able to input into those. But I can't see big changes to the CAPEX guidance, obviously, at this point.

And then just one follow-up. New product categories. I know we've spoken about beauty beforehand. Just wondered if you had anything significant planned over the next six months or so.

There's nothing new in the pipeline that I'm aware of. I think the major change on product strategy that we've had in the last six months is being collection and capsulising. What we do, do very well. Before we were delivering lots of new product, not necessarily in collections, but as it came into the business. The last six months, and you'll hopefully see that when you look at the websites, we look much stronger as our brands because we've been delivering everything coordinated. So that's been the biggest change to product strategy that we've had in the first half is deploying that. And with that, it's been really good because we've been able to track performance really, really well because these capsules, sometimes we deliver two capsules a week. So we're able to look very cohesive. So we've gone from lots of random new product arriving every day to actually being delivered into the warehouse in a coordinated fashion. So tops and bottoms and everything else are matching. And that's able to get the consumer to upsell and buy the whole outfit.

Hi, morning. It's Greg from Sure Capital. Just a couple, please. One on, could you give a bit of colour on conversion rate across the brands? And secondly, who do you think you're winning market share from?

So conversion rate, you'll have seen with the brand KPIs for Boohoo and PLT that conversion rate is down a little. And that's been as a result of a couple of things, many things really, but the primary things to talk about are continued transfer to mobile. So the channel shift in that respect as mobile has higher levels of visitors and lower levels of conversion rates. And we're seeing that continue as a general trend. And then of course you'll see the increased gross margin with a less promotional stance that impacts your conversion rate but has other longer term benefits. And then who are we winning market share from?

That's really difficult to say because who's out there online to win from? There isn't really. So you would have to assume that the market share that we're taking just in the sector at the east end of the market has to be away from the traditional retail. And obviously that's social change and everything else that goes with that. But yeah, largely we are gaining market share significantly as a group of brands now. And that was, you know, that was the multi-brand strategy was to win market share by being the major dominant high fashion at the youth end of the market player.

Morning, it's Dan Homan from Citi. A couple of questions. First of all, on the KPIs, I noticed that when you look at PLT versus Boohoo, you're now getting a better spend per active customer at PLT. Is there anything that you can point to to help us understand why that Boohoo spend per active customer has stagnated over the last couple of periods?

I think... What you're seeing is really the strength of PLT there that they've really resonated with young fashion conscious customers and overall as a group you can see the positive benefits and we feel like there's more choice for customers. Customers are kind of differentiating themselves to either of the brands or they're shopping across both of the brands and we get a higher spend overall, which significantly compensates for any cannibalization that you might get. But they've got a very strong customer engagement statistics. They've been offering the premier service for a long time. They call it royalty. And they've just really been gaining traction. And Boohoo, at the same time, has consistently decent levels of growth. which is good when somebody else comes into the market like that. So I think that's what's really going on there. It's the strength of PLT at the same time as Boohoo's been strong. And we've seen some big improvements in the Boohoo proposition over the last 18 months in lots of different areas. And we're seeing some great signs there that we're getting more engagement from customers and some recent improvements. So it's working well as a multi-brand approach.

Okay, thank you. And then the second one, can you just update us on sourcing and really how much of the UK is now your sourcing?

I mean, the UK is still a significant source for us, but our priority is speed in the supply chain. And that can be anywhere, a factory anywhere in the world. So as we're growing, we're looking at options all over the world. The key thing for us is that speed and working with our model, which is shallow quantities when we sell products initially. So all of the markets are significant for us, including the UK.