Boohoo Grp Plc Unsp/Adr

Hi, folks. Thanks for coming, taking an interest. Now I'm the chairman of Bought Myself a Suit, so all is good. Look, we're very happy and very proud of where we are today. We've come a long way in five years. We welcome John on board, and that's working great. He's only been here a little bit, but that works well. There's a lot more to do, and we're on our journey, but we're very confident in the future. Never too confident, but we're okay. And I'll leave you with John and the guys. Thanks.

Morning, everybody. For those of you who don't know me, I'm clearly John. I'll probably emphasise a few times this morning that I'm just in my sixth week. Just in case the questions get tricky, I'll pass over to my right-hand side here. One thing to start out that I'm really delighted to be here this morning. and standing up here to talk about the Boohoo Group and the last year and results that the team have had. I've watched Boohoo Group as a competitor for the last five years from the IPO, and I think some of the things they've done have been quite amazing. And there's only been one company that would ever entice me away from my previous job, and that was this team here. So I'm very happy to be here this morning and talk to you all. This morning we're going to announce a very strong set of results, great revenue growth and strong margins. In terms of the agenda for today, we've had the mood. I'm just going to give you some of the key highlights to start, then Neil will go into a much deeper financial review. carol then is going to talk more about sort of brand marketing and product and then i'm going to close at the end and again just some early thoughts i haven't been around the business now for five and a half weeks and just some of the things that i've seen some of the real positives that i'm going to pull out and then just talk about some of the um opportunity ahead and in terms of the kind of highlights of the results for the last year I think certainly for me the one thing that sort of stood out is when we just remind ourselves the business IPO'd five years ago and when it IPO'd five years ago in that first year it had 140 million net turnover EBITDA that year was 14 million EBITDA margin was 10.1% and at that point we had one brand which was Boohoo Woman If we fast forward that into the year we're going to talk about this morning, that group revenue has now jumped to £857 million, so quite considerable versus where we were. In terms of EBITDA, that's also grown to £84.5 million. In terms of EBITDA margin, and I know again we talk a lot about this in terms of consistency, but remember five years ago that was 10.1%. This year it was 9.9%. So again, a very, very healthy growth in terms of where we've come through. And again, versus sort of one brand back five years ago, we sit today as a group with Boohoo Woman, Boohoo Man, Pretty Little Thing, Nasty Girl, and then recently we've just added Miss Pap. So certainly quite a good journey in that five years in terms of where we've come from. If you look at the, in terms of some of the other stats before, I don't want to take too much away from Neil, but obviously in terms of year on year, that revenue growth 48%, in terms of the EBITDA plus 49%. Another really key one for me is just the active customers, 12.9 million up from 9.8 million last year. And then the other one, again, I'll just say a little bit about here, is in terms of landed key infrastructure projects. And again, Boohoo's very well known for its trading, its product, its marketing. But I think, again, Neil will talk a little bit about this later in terms of some of the key major infrastructure projects that we've landed very successfully this year. And again, I'll give my view on those when I come back later to give you my early thoughts. So without further, I'll pass you over to Neil.

thank you john and uh good morning everyone i'm really looking forward to taking you through the results for the year uh the yet again these are our best ever results and we've delivered a great trading performance fantastic levels of growth all of which is organic growth and at the same time we've landed those big infrastructure projects so it's been another year of big achievements for the group Carol's going to talk you through them in a bit more detail after I've been through the financials, and then you're going to hear John's first thoughts, and he's eager to share those with you. So on to the results themselves. Here's the income statement for the year, and needless to say, we're delighted with the performance, demonstrating that our own brand, multi-brand approach is working incredibly well, driving exceptionally high levels of profitable growth. Revenues increased to £857 million, up 48% year on year, and all brands gaining market share in all of their key markets once again. We've achieved this in a profitable manner, driven by a very strong gross margin performance. Gross margin for the group increased by 190 basis points to 54.7%, with strong gains at both Boohoo and PLT. reflecting the strength of the brands and their trading performance. We've reinvested these gains into marketing to really drive brand awareness in our focus markets, and that's setting us in good stead for future growth. Adjusted EBITDA came in at £84.5 million, up 49% on last year, and ahead of expectations with the EBITDA margin improving by 10 basis points to 9.9%. That margin was also ahead of expectations as we finished the year very strongly and we were able to leverage our cost base further whilst at the same time investing in marketing and the proposition to maintain the momentum into the new financial year. Adjusted profit before tax was £76.3 million, up 49% year-on-year. The adjusting items totaled £16.4 million. That was in line with the guidance that we gave back in September, reflecting share-based payment charges, amortisation of acquired intangibles and the exceptional item related to PLT's warehouse relocation. Lastly, we've seen tremendous conversion of the profits into cash, and I'll cover that in more detail later. But we finished the year with £191 million net cash on the balance sheet, up £58 million from last year end. So all in all, fantastic set of results that we're particularly pleased with as we've continued to make record investments in our infrastructure and customer proposition to support further growth. And we believe those investments are going to benefit our customers and our shareholders alike in this new financial year and beyond. So moving on to look at performance by brand and geography, Boohoo saw a strong acceleration in growth in the last two months of the year, with sales up 25% in January and February. And that represents the brand's strongest rate of growth since Q2 of 2017-18. So that performance was particularly pleasing as it was driven by direct retail sales. So growth on the Boohoo.com platform was strong across the UK and our overseas markets and it's accelerated more rapidly than sales on third party platforms. For the full year, Boohoo's performed really well and delivered market share gains in all of its focus markets, driven by growth in spend per customer, as well as by growth in active customer numbers. Sales for the brand were £435 million, up 16% year on year. And this growth has come at a time when the brand also delivered a really strong gross margin performance, up 170 basis points year on year. PLT has continued to go from strength to strength, once again performing ahead of expectations. Sales for the year were up 107% on last year to £374 million, with a really strong performance in the UK and across its international markets. Nasty Gal continues to make great progress with sales of £48 million, up 96% year-on-year, with a strong performance for the brand in overseas markets as well as in its home US market. Nasty Gal's growth also accelerated quickly in the last two months of the year with sales up 130% year-on-year in January and February. So in summary, multiple brands taking market share in multiple geographies with international revenues up 64% in the last 12 months and now accounting for 43% of group sales. Geographically, the UK, our most established market, really demonstrates the success that we're having with our multi-brand strategy. In the last year, we generated sales of close to half a billion pounds, growing at 37% year on year. Over the last two years, our platform of brands has delivered over 200 million pounds of revenue growth, in the women's wear market in the UK. Over the same period, according to Kantar, the online 16 to 34-year-old women's wear market grew by just over £300 million. So the brands on our platform equated to over 70% of the online market's growth in that period. And that's exactly what we're trying to achieve with the multi-brand approach, and we're delighted with how it's working and how it gives us the ability to grow more rapidly as a group. So now I'd like to talk in a bit more detail about our cost base. As you can see, we've continued to deliver leverage on our central costs. Over the last few years, other admin costs have decreased from around 17% of sales to just over 13% of sales in financial year 19 as the business has grown. That leverage enables us to make incremental investments into marketing and into our customer proposition, allowing us to increase the awareness of all of our brands and support our continued growth. And we expect the theme of leveraging our central costs to continue, enabling us to reinvest into our proposition to capture more market share, and that's reflected in our medium-term margin guidance. Marketing costs at 9.4% of sales have taken a step up this year as we've reinvested those strong gross margin gains into some high-profile campaigns to build brand awareness. And that's for all of our brands as well as building our international businesses. From here we wouldn't expect to see material increases on the marketing cost line. Distribution costs at 23.4% of sales have increased this year, but underlying this we've had increases from international mix and faster delivery services, as well as the ramping up of the new facility in Sheffield. We've also just recently gone live with our automation in Burnley, which we expect to begin generating significant efficiencies in the second half of the current financial year, giving us further firepower to invest in the customer proposition. So in summary, strong gross margins and leveraging central costs are enabling us to invest in growing new brands and new markets. And that will underpin future growth. And at the same time, we're delivering strong EBITDA margins. As far as cash flow is concerned, we've continued to see tremendously strong conversion of our profits into cash during the year, and free cash flow increased 118% on last year. Operating cash flow increased by almost 50% to £112 million, reflecting a really strong trading performance. Working capital inflows came in at £34 million, which was exceptionally strong, reflecting once again the strong trading through the year, our negative working capital cycle, and the fact that we had a really clean stock position at the end of the year. CapEx of £47 million came in slightly lower than we'd guided, reflecting good cost control on those major projects that were delivered during the year. However, it still represented another year of record investment for the group, and that was spread across our warehousing, IT, and infrastructure. And after that, we still generated 65 million pounds of free cash flow. So we continue to expect to remain free cash flow positive in the coming years, and at the same time, continuing to invest ahead of the curve in our infrastructure. So those factors I've just outlined meant that we finished the year with net cash of £191 million, and that was an increase of £58 million from last year end. The growth that we've achieved is driven by a mix of an incredibly engaged and extremely loyal customer base that's growing at a tremendous rate. On this chart, you can clearly see these levels of strong customer loyalty when you look at gross sales by year of customer acquisition. We first showed you this chart 12 months ago, and you could see then that our rate of value churn had come down from 34% to 13% over a five-year period. So I'm pleased to present the chart again and to say that that rate of churn has remained consistent, even though we've now added the Nasty Gal customer base into the charts. And without that, so the other customer bases for PLT and Boohoo, we would have showed a further improvement on those churn levels. In the UK, we're continuing to see improvements in engagement in the customer base, and that's on top of the significant improvements that we've made over the last five years. The signs are also encouraging in the faster growth international markets, and as we continue to invest in the customer proposition, we'd expect retention rates to improve, providing a tailwind for further growth overseas. We can see the health in the customer base in these stats. The KPIs at a group level show further excellent progress and improvements across the board. As a reminder, this table shows unique customers at the group level to account for shoppers that spend with more than one of the brands in the group. What the KPIs show is that with the multi-brand strategy, we're engaging with more customers, they're shopping more frequently, and spending more on each purchase. And the spend per customer is actually accelerating and up around 17% for the year compared to last year. On a two-year basis compound, that would be a 15% year increase. So that rate of spend increasing is accelerating. And again, that's more evidence that our multi-brand platform is really winning in the market. So I'd like to talk in a bit more detail about warehousing and capital expenditure. We're now well on the way to building a distribution network capable of supporting £3 billion of sales, and we're well ahead of the curve to meet our immediate capacity needs. So in the last five years, we've spent just short of £150 million on major projects. We've built two new facilities at Burnley. We've implemented the automation in Burnley just recently, and we've relocated a pretty little thing into its warehouse in Sheffield. So looking back over the last few years, we've built up a really strong record of making good decisions, deploying capital efficiently, and landing the right projects at the right time to support our global ambitions. And what we have today is significant levels of unit capacity to support our growth plans. In the year ahead, we'll expand further capacity at Sheffield up towards 15 million units, giving the group 30 million units of capacity across the two sites. These two locations play an important role as we build towards creating a distribution network that can support sales in excess of £3 billion globally. This also gives us the headroom and flexibility to explore what the most appropriate distribution network for the group would be whilst retaining a highly competitive customer proposition in all of our focus markets. We've also built a flexible technology platform and infrastructure on which we can launch brands and convert visitors into transactions at unparalleled rates. We're currently using and developing AI applications in many different areas of the business, from improving the user experience and improving customer service to improving trading decisions and financial forecasting. And we're doing this with a combination of in-house expertise as well as third-party applications. And again, we're using our capital efficiently but productively. As far as CapEx for the year ahead is concerned, we now expect to spend a little bit less than we'd previously guided. So capital expenditure for the current financial year should be in the range of £50 to £60 million as we're continuing to lay the foundations for further global expansion. So on to a little bit more mundane matters for a few seconds before I take you through the guidance for the year. We'll be adopting the new financial reporting standard IRS 16 in the current financial year, which covers lease accounting. This slide outlines what we expect the impact of that to be. So EBITDA will increase between £4 million and £5 million, reflecting the reclassification of rent expense into depreciation. At the EBIT level, we'll see a modest increase of around £250,000, and that will be offset by higher levels of interest of around £250,000. So overall, the impact is going to be broadly neutral at the profit before tax level. So after that, going on to financial guidance, we're really pleased with the encouraging start that we've seen to the financial year across all of the brands. For the full year, we're guiding for sales growth of between 25% and 30%, and that remains above the level that we've given for medium-term guidance in the past. That really reflects our confidence for the year ahead. Adjusted EBITDA margin is expected to be around 10%, and that includes the impact from IFRS 16 that I've just talked about. Depreciation and amortisation, we're expecting to be approximately £20 million as we start depreciating our automation equipment and the second warehouse in Burnley, as well as the IFRS 16 impact, which again is another £4 to £5 million of depreciation. CapEx, we're expecting to be £50 to £60 million. I've just talked you through that. Effective tax rate should be approximately 20%. We expect that to remain just slightly above the statutory rate. And adjusting items of around £13 million, a little bit less than last year, reflecting share-based payment charges and the amortisation of acquired intangibles. Our medium-term guidance of sales growth of 25% per annum and 10% adjusted EBITDA remains unchanged, reflecting our confidence in the group's potential as well as the benefits that we expect to attain from projects such as the automation that we can use to reinvest to support growth and margin going forward. And so on that note, I'd like to hand over to Carol, who's going to take you through some significant business developments that have happened in the last year. Thanks.

Good morning. Thank you, Neil. What did you do?

There we are.

Not strong enough. So yeah, another fantastic year for the group. And I'm really pleased to say that we are in such a strong position, invested in our multi-brand platforms, which we are going to continue to grow and scale, and certainly looking within our international growth within that. And as most of you are aware, and I think John mentioned, and I don't know if Neil mentioned as well, we just acquired another new brand, Miss Pap, at the end of March. It was just completely opportunistic. It's a relatively young fashion brand. It founded in 2015, has a strong social media following, just one million on Instagram, but growing. And whilst it's too early to expect anything meaningful in terms of the numbers for the group, we look forward to providing you with more detail and progress in due course. We're delighted to welcome John. I am really delighted to welcome John. He joined us in March. He brings with him a whole ton of experience, which is, you know, we're really, really kind of... pleased that we managed to hook him into the group and drag him to the Boohoo group. And I think he's already, I can just say, just after just a few weeks, proving to be a really good fit amongst Mahmood, myself, Neil, and the rest of the Boohoo executive team. So today I'm going to talk through some of our achievements in product marketing. There's lots done, lots achieved, but there's still loads to do. And so just turning to this slide, we have shown you this before, so you're quite familiar with it. But this is just to demonstrate how our approach to having multi-brands is building a stronger position in the UK. We continue to take a share of traffic from our larger and more mature competitors out there on the high street. So not only have our brands taken a higher share of traffic over the last 12 months, but when you put all of the brands together, I think we now are the major player, fashion player, that is, in the UK, despite just having been around for just over a decade. So I think, John, when you came to the stage, you know, just what you've achieved in five years. Well, actually, we're still really babies in the industry, and we've already taken that huge amount of market share just here in our home. So in February, we ranked second place, an impressive 6.3% of traffic, and that was up from 5.5% on the previous year. So it's also been a great year for us internationally. Our international revenues continue to grow rapidly, up an impressive 64% in the year. And we're well on our way to our international business hitting 50% of our sales as a group. We now have more than 40 websites and apps across the group. And they're very excited about the brands becoming truly global and all of those websites and all of those languages and all of those different currencies that we now have. And in particular, we're excited about the opportunity in our focus markets. where we have a small but very fast-growing share. And we're really seeing the benefits of our ability to offer great fashion and beatable prices that resonate with our customers. Within our international business, we've had some significant investments over the past 12 months. We've been upgrading our customer proposition, investing in teams on the ground, and I'm sure you've all seen the pretty little thing unveiling of their LA offices there. to the world back in February, allowing us to just get a little bit closer to that US culture and celebrity action that's going on over there. And then this slide, there's just a handful of the influencers we've collaborated with because I think you all know it's become a successful formula for the group. But in Boohoo, we ran campaigns with the actress Zendaya, singer Steph London, singer, rapper French Montana, footballer Dele Alli, Paris Hilton, and just recently on menswear, Quavo, the rapper out in the States just two weeks ago. And Pretty Little Thing actress Hayley Baldwin, now Hayley Bieber. She got married. Radio presenter Maya Jama. Hip-hop designer Carl Carney. Model Ashley Graham for our Curve collections. And most recently, I hope you all saw it because it was a big coup for us when Pretty Little Thing announced its collaboration with J-Lo just a couple of weeks ago. And in Nasty Gal, we've also had a few new ones. We've been working with actress Taylor Lachey, model and influencer Emma Louise Connolly, whose collections, by doubt, sell out in a matter of hours. And we've just launched one this morning. So have a look if you get a chance to have a look at that. And also Chloe Lloyd, who's the model we work with. So we are seeing a great response from our customers with these collaborations, and it is helping build our brand awareness, certainly in our overseas territories. And our network of influencers continues to grow and extend our reach even further. So that nicely leads into the Boohoo group being leaders and using social media to reach a target customer. We now have over 20 million followers across our brands on Instagram alone. And we see the opportunities to further extend this reach, increasing our engagement within our target audience. We've been launching lots of new ways to engage with our audience. And Pretty Little Thing launched a podcast back in January. It's called Behind Closed Doors. So give it a listen. It's quite interesting. They're doing lots of interviews with lots of celebrities and models and customers as well. So give that a listen when you get a chance. And some of them are very high profile. And our social campaigns have included our ways to wear. This is content that we're creating absolutely daily now throughout the group. It shows our customers how to wear the same product that they buy from Boohoo multiple times to achieve different looks. And you know that I've always spoke very passionately about the Boohoo brand and its inclusivity. Well, now we've extended the size ranges right across the group, so all our brands now, starting from size 4 in women's up to size 26 and up to 4XL in menswear. So that's really about that customer, growing that customer, keeping that customer for longer as well, and our internationalization because actually we have to have lots of new sizes for new markets we're in. And of course, the best way to engage with the customer, I'm going to bring it back, is to product. Just over that 12-month period, we launched approximately 70,000 styles across the brands in that 12-month period. So you can imagine the amount of bestsellers that you'd get from 70,000 products. Last autumn, I think I may have mentioned it before, but animal prints were huge. We had the read right across the group. They were absolutely outstanding for us. That actually went into spring, and it moved on from being leopards to pythons, pythons in neon colors, and then that moved into the athleisure trend in neons and brights. And just recently, this spring, we've seen the return. And I'm wearing a trouser suit today, a coloured trouser suit, and you'll see a Boohoo one here on my left. So that's actually a new read for the group. We've never really talked about tailoring before, but actually it's come through really, really strongly. And we have now adopted our supply base to be able to cater for these new collections. And Nasty Gal, quite different reads. Actually, we've had quite a lot of ditzy prints. Small checks, you'll see over there, the Ginghams and Broderie Anglaise has been a big trend that started at the beginning of this year. And before I hand over, I just wanted to talk a little bit about sustainability. I know it's a hot topic and something you all feel very passionate and asking us about. Sustainability has always been a major focus for the group. Sorry, have I got the right page? So... It's something that's very, very important to our customers. We have a huge conversation with them ongoing. And it's a question that's always asked for us. So obviously, we've been doing a lot in the last... 12 months and a lot for the duration of the time I've worked in fashion. But we've got some great collections in the pipeline this year across the group. Pretty Little Thing launched a sustainable collection just last week. That was across At Leisure, Basics, all in 100% recycled yarns. Boohoo launched a range of T-shirts at the end of last year, which were 100% recycled polyesters. Nasty Gal continues to use upcycle materials within the vintage line. So this collection, it's a limited collection. It's all sourced from used fabrics, which are all sustainably sourced. And because we've got a huge following on social media, we think it's very important to have that conversation direct with our customers as part of the education of how to wear things. So I mentioned the ways to wear videos. Well, this is part of our strategy on sustainability. It's educating the consumer not to throw away their clothing, to wear it many times. It's not just to buy something and wear out on a Friday night and then dispose of it and wear something else. So it really is part of our social channels, part of that education to show our customers how to wear things multiple times. And then, of course, when really you feel the products are no longer suitable or they've come to the end of life, we've partnered with a company called Regain. For those of you not familiar, they manage recycling and creating the circular economy in fashion. We encourage our customers to download an app that they have called Regain, box up what they no longer leave. There's 20,000 drop-off points in the UK, so you can take it to any of those. And in return, you get vouchers off your next shop with Boohoo. another brand or maybe a travel company or something that are signed up to this so it's it's pretty good and at Burnley DC we are proud to pledge that we have a zero landfill policy in place. And when it comes to sourcing sustainability, this is an area Mahmood and I have always been very, very close to. And we know John has a whole load of experience in this field from his previous roles. Many of our suppliers have been with us from day one. And I guess that's really reflective of how they've supported the Boohoo Group's growth and how we have helped them on that journey as well. So our supply chain, it's very, very important to us. We ensure that they are there for our future growth going forward. So we've been pretty active in this space, and to help them on that journey, we've been putting faster payment terms in place. So you'll find all of our suppliers are now paid in 30 days or less. which is pretty good in the industry that we work in. We've also set up compliance and audit teams really on the doorstep here in the UK. And that's really so that all our factories can get through their audit process in a timely fashion. It's all in accordance with SEDEX and in line with the ETI Code of Conduct. So we're continuing to put sustainability at the heart of all our brands. and have those conversations with our customers, as it's very much important to all of us. So just to summarize, there's loads going on. We continue to invest in our platform, increasing our websites and apps, which I mentioned earlier, for our international growth. And I just want to touch on our operational platform. We've never really talked about it before, but it's tried and tested now. So by our operational platform, I mean our test and repeat, our sourcing, our logistics rollout, our ability to be able to add on new websites, build in new apps, deliver new languages very, very quickly. So it's all operational. And that's put us in a position to be able to plug in new brands should opportunities present themselves. So I can't go without saying that Mahmood and I are delighted to work alongside John going forward. And on that note, I'm going to hand you back to John, who we are really excited to have on board. John will be leading us through our next stage of our growth. And I'm sure he's keen to share his initial impressions with you. Thank you.

Thanks, Carol. I promise I won't talk about any of the nights out we had so far. So in terms of initial thoughts, initial views of the business. So as I said, I've been around the business now for about five and a half weeks. And I've got to most parts, whether it's warehouses, offices, around the different brands and their different offices, spoke to most people in the business at this stage as well. So the first thing that always stands out for me is around culture, because I think it tells you a lot about a business story. in terms of what got it to where it is and what's going to get it to the next part of the journey. Some of the key words that I point out when it comes to culture of the Boohoo group is number one is young. It's very high energy, clearly entrepreneurial in terms of where it's got to today. It's got a real will that wants to win. Everything is possible and everything it wants to win when it goes about something. It's not afraid either, which I think in the current retail climate is a really important factor to have, that it's not afraid about pushing. It's not afraid about trying new things. And a really good thing that you see is no matter which of the brands and the offices you go around, so whether it's Boohoo, Nasty Girl, Boohoo Man, pretty little thing, actually lots of Boohoo group customers work in the business. So actually you see what they're wearing every day. You see how they're reacting. You see the social media. You see where they're going out at the weekend. So that's really important to me from a culture point of view. The next one then really for me would be around creative. So you're in a very creative business, so you need the best buyers, you need the best designers, the best marketeers, the best branding. And again, everything I've seen so far would give a big tick in the box for each of those because no matter what, you know, Carol, you pointed it out, but as a retailer, product is always number one. So no matter what infrastructure you have in the background, if your product is not right, then everything else falls apart. So really, really pleased with what we've got on the creative side. And test and repeat, which I think is a real kind of piece around Boohoo Group. And, you know, you'll have heard it a lot over the last five years. But I think, again, you know, in the current climate in retail, that speed to market on fashion is, you know, just incredible in terms of what the group are able to do very, very quickly. And again, because of the current market, what's really interesting is it's a low investment in stock. So Carl talked about 70,000 new styles in the group last year. Well, actually, if some of those don't work, then actually your investment in that stock is quite low. So you're only repeating back in to what are the best sellers. So a really, really important point for me. Technology clearly keeping pace with what's going on in the marketplace, keeping pace with the growth within the business. There's a mixture of third parties and doing and building ourselves when we need to do that. So a good combination there for me. And the business, again, as I said, look, it's had a great reputation around, I think, you know, product trading and marketing. But clearly, you know, we get from that 140 million up to 857 million and you need to have some other skills with you to get that growth and to keep on that journey. Two of the particular standouts for me in the last year were, number one, was the movement of PLT from the Burnley warehouse into a new warehouse in Sheffield. Again, what's really important, people take a lot of that for granted sometimes, but that's actually quite a complex maneuver because you're running a business day-to-day. To move it over, to get operational, to then go into peak, and then, as you all know, to deliver a very strong peak, is really a great result in terms of what the business has achieved there. And then in terms of Burnley and automation, so automation went live in Burnley on the 31st of March, just a couple of weeks ago. And again, that's a very complex, you know, so there's engineering, there's IT, there's a lot of people skills and training required for that. It's a big project planned over many years. So when you go live on the day, you're pretty much live. There's no going back when you switch on the button. And to see, again, within sort of two hours on the Saturday, we've already picked and are dispatching orders. And I think that in the first week of that operation, we actually picked and dispatched a million units. is, again, just a great credit to what we have done there. And, again, the engineering company who we worked very closely with there, PSB, maybe not the exact words, but their words were something like they'd not seen anything like the switchover that they'd seen in Boohoo Group. And probably... a good opportunity to thank Harry at the back for leading that project and delivering some of those really, really good things for us. So I look at all of that together, so whether it's product, whether it's people, whether it's culture, technology, infrastructure, and what I'm really seeing is, look, a really great base in order for us to build and go forward with into the future. And when you look at... Oops. when you look at the market in terms of, you know, what that might look like. If we look at the UK as an example, and the UK today sort of clothing and cosmetics market is worth about £70 billion. This is for 2018. The online penetration of that is 19%, which is just over £13 billion. And actually, of that £13 billion, Boohoo's market share today is just that 3.6%. So it clearly shows quite an opportunity in terms of where we can go in the future. Again, if you look at Europe as our secondary market, £274 billion market size, 15% online penetration, which is about £41 billion. And again, Boohoo's share of that market standing at just 0.3% of the European market. When you look at the USA market, again, £236 billion, online penetration at 21%. And again, Boohoo Group's market share there at 0.3%. So when I look at all the infrastructure and coming from the background I've come from, and I look at the market opportunity that we've got ahead, that's what really gets me excited. Clearly, the front row are getting excited as well about it. But it really gets me excited about, look, what that future might hold. Carol talked as well about... We started five years ago with one brand. Now, do we talk about platform five brands? It's not just about the current, but maybe in terms of some non-organic opportunities as well. Without keeping everybody too long or whatever, what's for me in summary? I think, look, we're definitely a leading global multi-brand uh fashion group you know product and customer comes first and always will come first and we've got a leading customer proposition we've got engaging content engaging content and innovative marketing and we're always seeking to improve uh productivity and efficiency so we're not getting carried away with ourselves so even in the warehouses as neil spoke about ourselves We're trying to do those in the most efficient way possible. And again, just looking at the market share, if you look at the other markets that we currently trade in, there's a huge opportunity for us to continue growing and get even bigger than where we are today. So I'll just say, look, thanks, everybody, for your time this morning. And we're now going to hand the floor over to some Q&A.

Thanks very much. It's Charlie Miosans from Exam BNP. Two questions, please, on the cost base. Firstly, I just wanted to check your comment earlier where you said you would not expect a material increase in the marketing line going forward. I assume that you mean in percent of sales terms. You would still be planning on growing that? Or absolute, just to clarify. And then secondly, with all of the warehouse efficiency that you're going to get, particularly, as you said, into the second half, how should we be thinking about that trading off against the higher distribution costs you typically have in overseas markets? Thank you.

So on the marketing, yes, I was referring to as a percentage of sales, we wouldn't expect to see increases up from that 9.2%. So that's a level that I view as being stable at the moment. But what that includes is being able to invest in new markets, new brands, because in that mix we've got big investments in Nasty Gal and Boohoo Man, as well as newer markets for even Boohoo and Pretty Little Thing as well. So there's a lot of investment for the future building and supporting growth in there. And then on the warehouse efficiency, what we're saying at the moment is the automation is going to get up to full efficiency in the second half of the year. And that will be a ramp during the first half of the year. But we're not going to... kind of lay out any numbers in terms of what leverage is going to come from that. But the signs are very good. As we said, we've seen a good cutover for the automation and now it's going to start building efficiency. But then on the other aspects of distribution costs, we've got more international sales, we've got high growth international markets, we've got brands such as Nastigal with higher distribution costs, the percentage of sales growing at a fantastic rate. So what I would expect is that distribution costs, the percentage of sales for the year to go up significantly. around about 75 to 90 basis points depending on what your models have already got in. So that's what we'd be expecting overall but we'll be able to give further updates as to how much benefit we're getting from the automation. The other thing that you've got in distribution costs is that the total thing in the first half of last year was in Burnley, in quite an efficient state, and then it's been in Sheffield and building the efficiency there as well. So that's one of the other impacts that are happening there.

Thank you very much. And if I may, just one more. The gross margin obviously was a really standout success for the group last year. How much of that came from better control of, let's say, unwanted markdown as opposed to a reduction in promotional intensity?

A lot of it was from Markdown, but what I would say is that it was all from great product. That's what's been driving the higher margin. And that goes across the brands. So if you get the range right, if you've got the right size of range, that helps. But the products in the range have all got to be great. And I think in Boohoo, we've been putting a lot of emphasis on that in the last 12 to 18 months, actually improving the products that we're buying. Getting the range a bit more efficient in terms of size and also making sure we back the right products in the right depth more so. And presenting them as well as we can as well in the marketing. And that's what's been driving the margin increases in Boohoo and we've been able to then invest in marketing and that's helped support the higher margins. And in PLT, the strength of the brand has been phenomenal the whole way through, and they've seen great gross margins.

Hi, Paul Bonnet from Bank of America. Welcome, John. Thank you. I have three questions for you guys. I think the first one relates to the geographical performance. So I think you had a sequential acceleration in Europe and in the US. Can you explain a little bit what's driving that? Has there been a marketing push in the US after you opened the new headquarters of PLT there? And in the rest of Europe, can you explain a little bit in terms of geography, what's working, what's not working? My second question is for the Boohoo brand performance and acceleration. Can you dichotomize a little bit between Boohoo Man and the Boohoo brand itself? Because the latest data that I've seen suggests a significant acceleration at Boohoo Man specifically. And then it's a bit more of a holistic point for my last question, but what do you think of SHEIN and Fashion Nova? And what differentiates you from them? Not really in the UK because you have the advantage of having your warehouses in the UK, but more for the US and the rest of the world. Thank you.

Okay, well I can take that geographical point. So Europe and the US, we've been having a marketing push and that goes for Boohoo and to some extent Pretty Little Thing and also Nasty Gal. So what you're seeing in the US specifically is that there's marketing pushes going on for all of the brands. and they're all working well and we've had some high profile influencer campaigns as well as the the normal uh marketing channels have been working well and um and we i think we've got the proposition right and and we're making good progress in all all of the brands there Europe, likewise, I think we're pretty small in Europe as a whole, and the key markets there are growing well, but also some of the markets where we're not deploying marketing spend that much, such as Scandinavia, we're doing little bits, and they're performing well as well. So it's generally across the board, across the brands, In Europe, it's more so Boohoo than the other brands, but US, it's across the board. So the Boohoo and Boohoo Man acceleration, I think what we've seen is that the acceleration in Boohoo growth has been mainly womenswear. So Boohoo Man has been growing strongly throughout the period, but it's still not influencing the overall growth rate that much. So Boohoo women's growth rates, two or three points, sometimes a bit more or sometimes a bit less relative to the overall Boohoo growth rate. And so the acceleration has been more noticeable in Boohoo women's wear in the recent months. Who wants to take the point about Sheen and Fashion Nova?

That's what we were just discussing.

We could say we've never heard of them, but we won't do that.

Well, we haven't until a few years ago, in all honesty.

I think our ability to grow globally is, I mean, we know their businesses, of course, and we watch them. But I think their ability to grow globally. Shane is a Chinese outfit, so they've got a long way to go. Although they're moving around quite fast, they've got quite a way to go. Fashion Nova is predominantly just the USA. So I think where Boohoo and the group is, we are global and expanding globally. So, I mean, at this point, that's all there is to really say about them. But we are aware of them. But it doesn't worry us in the slightest.

There's no... I think I come back to where we differentiate ourselves as having multiple brands that can be meaningful and be different in different territories. And that's what we do differently. So, you know, we have Nastigal, which is our U.S.-born brand. with an international, or starting its international journey, and Boohoo and Pretty Little Thing, which are UK brands, which also are on their international journey. So there isn't a direct comparison, really, to anybody who's doing quite what we do in the same way, other than traditional bricks and mortars that have a global rollout, you know, just from different brands doing different things. But yeah, yeah.

Maybe just one last follow-up question. How much headwind do you expect from U.S. growing that fast because you have to send from the U.K., if anything, because your prices are slightly higher in the U.S. at comparable exchange rates? But is there any headwind on the distribution cost from that?

That's part of the headwind around distribution costs that I was just talking about, that 75-90 basis points. So that's coming just from a higher mix, not just of sales from the US, but that is our biggest international market. And as you point out, the distribution costs are higher. But having said that, our prices are very competitive in the US market still. So we don't anticipate there's a headwind to growth from having to ship everything from the UK at the moment. We feel like we've got a really competitive proposition there. I'm sure in the future it will get more competitive, but it's competitive as it is at the moment. You can see that from the results. Thank you so much.

Good morning. John Stevenson from Peel Hunt. Usual three questions, I guess. First up, on Ms. Papp, can you comment on the sort of positioning against PLT, their level of customer crossover, number of actives, just general thoughts, thoughts around the brand and how you see it? Yeah. It's mixed reviews at the moment this morning, actually, but it's... Thank you. Second one on the pick efficiencies at the warehouse. Thinking more about the customer proposition, what does this mean you can do in terms of improvements, whether it's capacity at peak or how might the customer proposition improve as a consequence of Sheffield and Burnley? And finally, just for John, I guess, on sort of Boohoo versus Primark, just general thoughts in terms of when you come in, if there are any obvious wins in terms of how Primark used to do things or indeed areas where Boohoo sort of win on that front. Any comments you've got?

Shall I go first then? Yeah, yeah. Yeah, I suppose, look, in my previous role, I've been in that business when it was less than 100 million turnover and to see where it is today. So, yeah, there's lots of comparisons in terms of growth stories. The great thing for me is to say, look, having spent the five and a half weeks in the business, going around, seeing everybody, seeing what the business is capable of, where it stands today, And then more importantly, looking at the opportunity, particularly in online, is that's the, you know, the fastest growing side of the retail sector at the moment. But for me, I just see that opportunity in terms of the next couple of years. And yeah, we've got to get lots of things right in order to make sure we capture that. But I definitely feel confident that that's in our hands if we got our way through that. So lots of in terms of growth story and where we were, where they were. And the bottom line for me, I just look at opportunity. So now it's about how we grab that opportunity in the future. But operationally, there was nothing that stood out. Look, there's different scales in different countries. It's about that. We just talked about the USA. Obviously, at some point, if our business becomes a scale in the USA, might we want to do something in the USA from a warehouse point of view? So these are all, for me, they're parts of the journey, and it's about what time. and if you want to do those. So it's really just about the journey as we go through that. But they're the key decisions, because getting those right, really, and at the right time and at the right cost, make it right for us as we go into the future. So that'll be important decisions that we'll need to make as we go forward.

Just for the record.

Just on the missed part, I mean, it's so tiny. Um, that crossover is like not important at this stage. Um, how we position the brand is work in progress. Um, initial thoughts and their initial thoughts, and they may change, um, would be positioning it, um, a little bit as a, as, as a dedicated going out dress collection, just to start with, uh, with maybe some glamour swimwear and that type of thing. And start in there and then building from that. But it can become whatever we decide that it wants to become because it's really quite small at this stage. And the crossover is so tiny that it doesn't worry us at all.

The other question was on peak efficiencies and how they can help the customer effectively. So obviously, with the automation, we will be able to clear down the well of orders that builds up over peak periods. So that's good for the customer so that we can maintain our delivery proposition effectively. much more throughout the year, but basically always on fast delivery services. And also you've got more sortation options with the setup that we've got at the moment, and that can lead to later cut-offs for next day delivery or express delivery internationally as well. So there's benefits for the customer, but the primary benefits are obviously on the efficiency side. side of things and we'll let you know how that's going as we progress with it. Very good. Thank you.

Morning. Matthew McEachran from Nplusone. A couple of questions from me, please. First one, just could you elaborate a little bit on the conversion rate deterioration in PLT and Boohoo. Is that a trend that's emerging as a result of customers jumping from one brand to the other? Or is there something else that's going on behind the scenes there?

There may be some of that, but that's not really of any significance in what we'd see as the decreases in conversion rate. So there's a number of factors. One is the continued shift to more mobile visitors that have a lower conversion rate. The other is the extra growth on the international business, so the international sites convert at lower rates. Those are the two primary factors there. But having said that, there's another factor in that a higher gross margin, that strong gross margin factor, performance that we've seen generally has slightly lower conversion rates associated with it as well. So very bluntly, if your prices are much higher, then your conversion rates are much lower. And we're always trying to get that optimal level of conversion rate for the proposition.

Yeah, that's helpful. Thank you. And then the other question was just around social media. Are you seeing any evidence around the older cohorts in terms of switching social media off for periods of time? And if so, are you seeing changes in the weekly spending profile happening?

switching social media off. Oh, you mean people switching social media off? Yeah, your customers, yeah. I don't think we're noticing that at all. Our customers are firmly on social media. That is the most effective way to reach them. Okay, thank you.

Hi, it's Simon Bowler from Numis. A couple of questions if it's okay. Firstly, can you comment a little bit on the profitability of the different brands? If my read of the minority interest is right, it looks like PLT is a slightly higher margin structure than the others. If you can update any thoughts on that, that would be helpful. And then secondly, with regards to bringing new brands into the group, obviously seeing that through MISPAP, do you think the way to do that will continue from here to be inorganic or is the opportunity for you to build new brands in-house entirely?

In all honesty, if opportunities to present themselves come along and we think they're meaningful and we think we can do something with them, then we'll We'll go through that process, but we haven't ruled out other startups within, certainly from where we are now, where our customers are going, and what does that mean to us all. But I think new brands and new territories would be interesting. But as I say, I think what I tried to explain earlier was we've got the environment now. We're ready now. for the environment now, certainly with John on board and bringing in new infrastructure, sourcing the warehouse, you know, clearly that execution's gone very, very well. We've created an environment now where I think we're ready to be able to bring in existing brands or start up new ones.

And on the profitability by brand, so what you've got in the group in broad terms, I'm not going to talk about the magnitudes of it, but you've got Pretty Little Thing and Boohoo that are a similar scale. And Boohoo, when I talk about Boohoo, I'm talking about Boohoo women's wear. Similar scale, similar EBITDA margins. And then you've got in the group, Nasty Gal. We've been investing quite a lot in Nasty Gal during the year, particularly in marketing in some of its markets outside the US. And therefore, you can see that would be a negative EBITDA margin. And then you've got Boohoo Man, which is kind of in between the two. So a much lower EBITDA margin than Boohoo, growing rapidly And again, we're investing in growing the awareness of the brand there. So that's broadly the structure that you've got at the moment. Thank you.

Hi, it's Caroline Gulliver from Jefferies. Can I just follow up a little bit on that sort of looking at new brands comments you just made? Are you still targeting that sort of 16 to 30-year-old customer or are you actually going to potentially expand that age range, maybe look at where, as you said, where your customers might go on to? And when you look at potentially new brands and new territories, are you looking at brands that then have the potential to become global or are you looking more at perhaps more of a regional portfolio?

The investigation's very new, so what we're looking at is very much in its infancy, so it's too early to be commenting on what could do what. I think looking at our current production sources, the 16- to 30-year-olds, really where we sit from a sourcing perspective, and if we were to look at a customer outgrowing that, that's certainly very interesting, but obviously the sourcing... for that product would have to vary. And I think that's part of John's contribution to the group now is John can bring that sourcing on board. So it's a bit of a not just acquire a brand because your customer's getting older and you want to do something with that customer. We actually have to set up infrastructure and sourcing to support that as well. But yeah, but all of the other conversations are very, very new and a bit early to comment on.

Yeah, Tanjirat from Whitman Howard. Just a few small questions. Looking at the growth rates of customer in Boohoo slow down in the second half from 15% half year, 9% at the full year. Is that, again, sort of function of pricing, sort of affecting your customer attraction? That's the first question. Secondly, small accounting question. The accruals appear to have doubled by about 40 million across the year. Can you just tell us what that was? And the third question, how do you account for the influencer payaway? Do you take it in the gross margin or the marketing? And as a percentage of total marketing, roughly what is it? That's it.

So... On the active customer growth rates for Boohoo, we're actually quite pleased with what we're seeing in terms of customer engagement for Boohoo, particularly with the pattern through the months and the trajectory coming into the new year. So we've seen new customers actually start increasing year on year, whereas they'd been pretty flat previously. So we're seeing all the effort that we put into the product and the marketing coming through in active customer numbers. But as you point out, on the face of the numbers, when you look at them for the six-month periods, which are trailing one-year active numbers as well, then it looks slightly different to that. But that's not really what we're seeing in terms of trajectory coming out of the year and into the new year. On the accruals, there's a few factors in there that mean we've got high accruals at the year end. So we've got some suppliers that we didn't have last year. So for instance, the third party logistics partner in Sheffield. So there's some increase in accruals around those type of things. And then we had the automation project at a fairly virtually fully complete by the end of the year but we hadn't made final payments on that so there were higher levels of capital accruals for that and then there was also some quite high stock accruals as we were seeing great demand in the last couple of months of the year and we were ordering and receiving stock to keep up with the growth going into the new year. So those were really the big factors increasing accruals year on year. And I think the third question was about influencers. Those costs, payments to influencers are recognized as marketing costs. And we don't give out details as to how much that represents of the total marketing costs.