Boohoo Group Plc · LSE:DEBS
Boohoo — H1 FY2023 Earnings Presentation
41 slides from Boohoo's earnings presentation, November 2022
Slide 1: Interim results
Interim results For the six months ended 31st August 2022
Slide 2: Introduction
Introduction • Mahmud Kamani - Introduction • John Lyttle - Strategic Update • Neil Catto - Financial Review • Carol Kane - Our Product & Our Customer 01
Slide 3: Strategic update
Strategic update John Lyttle, Group CEO
Slide 4: Overview
Overview • Our focus remains on optimising operational performance through efficiencies and cost savings • We are selectively investing to build for the future on the back of solid growth and learnings during the pandemic period 03
Slide 5: Ongoing headwinds
Ongoing headwinds vs 6 months ago International delivery proposition Freight costs Returns rate Inflationary cost pressures Demand & consumer sentiment FX impact on sourcing costs no change deterioration 04
Slide 6: Highlights
Highlights • Revenue of £882m, down 10% yoy, up 56% over last 3 years • Significant market share gains in the UK over the last 3 years • International revenue up 35% over 3 years, short term performance impacted by delays to delivery times • 19m active customers, up 6m over 3 years • Huge addressabl
Slide 7: Strong 3 year growth significantly ahead of competitors and markets that we operate in
Strong 3 year growth significantly ahead of competitors and markets that we operate in UK performance supported by price, product and proposition resonating with customers UK online UK online market share penetration 5.6% 8.4% 73% 28% 42% 56% HY20 HY23 HY20 HY23 35% ou t UK G s do p OS ati up xt t t
Slide 8: We want to lead the fashion ecommerce market
We want to lead the fashion ecommerce market Social media Active customers Total addressable following market 19m 13m 34m 65m 100m 500m HY20 HY23 HY20 HY23 HY20 HY23 07
Slide 9: Near term focus
Near term focus Adapting to the current environment Optimise supply chain Greater emphasis on short lead product Focusing on Tighter stock management operational Inventory stock holding down improvement significantly in first half Cost management Continue to manage overheads tightly 08
Slide 10: Unlocking strategic enablers
Unlocking strategic enablers Selectively investing to capture future growth opportunities Automation Wholesale US DC 09
Slide 11: Automation
Automation • £125m Sheffield automation project • First phase of automation now live • Significant capacity expansion • Expected payback within 5 years 10
Slide 12: US distribution centre
US distribution Centre • Transformation of delivery proposition with Next Day delivery to key markets • Will cover 95% of US within 3 days vs 10 days currently • On track for phase 1 go-live mid-2023 11
Slide 13: Wholesale partnerships
Wholesale partnerships • Increasing brand awareness • New routes to market for group brands • Entering new markets • Giving partners ability to access our short lead time model • Covering UK, Europe, Middle East, with more opportunities to come 12
Slide 14: The Digital Department Store
The Digital Department Store Focusing on rapid partner on boarding /01 /03 More partners, more brands, more products Creating Maximising a platform choice to to showcase drive growth brands to our ever growing community of customers /02 13
Slide 15: Creating value for our third party brand partners
Creating value for our third party brand partners 80% 98% 35% of customers purchase brand recognition uplift in a brand partner for the customer spend first time 14
Slide 16: PLT Marketplace
PLT Marketplace • Provide a resale platform, giving customers a more sustainable approach to shopping • Functionality to link to existing PLT account and easily re-sell garments • Ability to sell any brand • Over 100k people signed up already, #2 in app store on launch 17 15
Slide 17: Summary
Summary Focus in the near term remains on: • Optimising performance • Improving profitability Selectively investing to capitalise on significant opportunity ahead: • Wholesale • Automation • International distribution network • Debenhams Confidence in the Group’s prospects unchanged 16
Slide 18: Financial review
Financial review Neil Catto, Group CFO
Slide 19: Summary group income statement
Summary group income statement Six Months to End August (£m) HY23 HY22 Change Sales -10% YOY, but + 56% vs. 3 Group Sales 882 976 (10%) years ago. Gross Profit 464 533 (13%) • Impact from increased returns rate, as expected Gross Margin 52.5% 54.6% (210 bps) • Demand backdrop softened in Q2 in the U
Slide 20: Segmental results
Segmental results 406 338 REGION 386 BY RE E U VE 250 EN NU REV 161 545 E BY R E G International 570 430 UK 315 234 N IO EG IO N R Y RE VENUE B HY19 HY20 HY21 HY22 HY23 Six Months to End August UK USA ROE ROW Total Sales (£m) 545 177 102 58 882 Change (%) -4% -29% -2% 14% -10% 3 Yr Change (%) 73% 60
Slide 21: Group KPIs
Group KPIs • Active customerbase significantly larger compared to three years ago • Continued increases in multi-brand shoppers • Further improvements in order frequency and spend per customer • Underpinning future growth potential Six months to Change Change HY23 HY22 HY20 End August (%) (%) Active
Slide 22: Customer metrics remain healthy
Customer metrics remain healthy • UK business built on a loyal customer base • UK retention robust, more recently impacted by uncertain consumer demand • Service challenges continue to impact international retention • Focus on landing key projects to enable improved service and re-accelerate interna
Slide 23: Group operating costs
Group operating costs Six Months to End August (£m) HY23 HY22 1 Yr Change Marketing 94 115 -21 Distribution 222 233 -11 Other Admin Costs 138 121 17 Total 454 469 -15 121 129 138 109 107 115 104 Other Admin 95 94 64 Marketing 223 233 255 222 198 Distribution 1H21 2H21 1H22 2H22 1H23 Total overheads
Slide 24: Factors impacting UK & International contribution reflect external pressures, with self-help
Factors impacting UK & International contribution reflect external pressures, with self-help UK International 01/ Gross Margins: 31% Pressure: Inbound cost pressures impacting all regions 01 24% Opportunity: 01 02 03 Customs warehouse Headwinds expected to ease in time 02 03 02/ Distribution Costs:
Slide 25: Summary group cash flow
Summary group cash flow • Net debt position of £10 million • Free cash outflow of £2.7m, after capital expenditure of £38.7 million • Significant liquidity at period end of £315 million, reflecting new £325 million RCF • Strength of Balance Sheet and significant liquidity headroom support selective
Slide 26: FY23 financial guidance
FY23 financial guidance FY23 SALES AND EBITDA GUIDANCE • Planning for revenue performance to continue in line with Q2 over the balance of year, given the consumer environment and inflationary pressure • Adjusted EBITDA margin range of 3% to 5%, from 4% to 7% previously, due to operational deleverage
Slide 27: Product, brand and marketing
Product, brand and marketing Carol Kane, Group Co-Founder & Executive Director
Slide 28: Introduction
Investing for the future Introduction • Our brands • Making sustainability accessible • Increasing share of wallet • Our current focus areas 27
Slide 29: Slide 29
Slide 30: Kourtney Kardashian
Kourtney Kardashian • Customers are confused about sustainability • There are misperceptions: unaffordable, unfashionable • We’re uniquely placed to face into that • Opening up the conversation • Amplifying reach • Docuseries features experts talking about real issues in a straightforward and honest
Slide 31: Every style for every body
Every style for every body Increasing share of wallet Making fashion accessible to 19 million 4.2 million everybody of every age with unique customers across our multi brand shoppers, spending every budget brands 3x more £25 £99 £355 • sold out • sold out • sold out • 30
Slide 32: Our current focus areas
Our current focus areas Against a challenging macro backdrop we are ensuring we address the needs of all customers • Re-enforcing value across our brands • Focusing on price and accessibility for our customers • Adapting product mix to meet changing demand 31
Slide 33: Summary
Summary • Ongoing challenging environment • Adapting as a business • Focusing on operational improvement • Selectively investing to capture future growth opportunities • Confidence in the Group’s prospects unchanged 32
Slide 34: Appendices
Appendices
Slide 35: Reported revenue
Reported revenue 1H23 Reported 3 Mths to 31st May 3 Mths to 31 August 6 Mths to 31 August Sales Breakdown FY23 FY22 %CHG % CER FY23 FY22 % CHG % CER FY23 FY22 % CHG % CER (£m) Total 445.7 486.1 -8% -8% 436.7 489.8 -11% -10% 882.4 975.9 -10% -9% By Region UK 272.1 274.6 -1% +1% 272.5 295.0 -8% -8% 54
Slide 36: Reported revenue
Reported revenue FY22 Reported 3 Mths to 31st May 3 Mths to 31 August 4m to 31 December 2m to 28 February Sales Breakdown FY22 FY21 % CHG % CER FY22 FY21 % CHG % CER FY22 FY21 % CHG % CER FY22 FY21 % CHG % CER (£m) Total 486.1 367.8 +32% +32% 489.8 448.7 +9% +10% 714.5 660.8 +8% +9% 292.5 268.0 9% 9
Slide 37: Group balance sheet
Group balance sheet Six Months Ended 31 August (£m) HY23 HY22 Assets Intangible assets 131.4 121.6 Property, plant and equipment 358.8 287.9 Right-of-use assets 60.7 53.6 Financial assets 0.7 7.3 Investments 6.5 - Deferred tax 7.4 2.3 Non-Current Assets 565.5 472.7 Working capital (22.7) (47.1) Leas
Slide 38: Financial calendar
Financial calendar DATE EVENT January 2023 (TBC) P3 23 TRADING UPDATE May 2023 (TBC) FY23 RESULTS ANNOUNCEMENT 37
Slide 39: Glossary
Glossary ADJUSTED EBITDA Calculated as PBT, interest, depreciation, amortisation, share-based payment charges and exceptional items ADJUSTED EBIT Calculated as EBIT excluding share-based payment charges, amortisation of acquired intangible assets and exceptional items ADJUSTED PBT Calculated as PBT,
Slide 40: Forward looking statements & disclaimer
Forward looking statements & disclaimer Forward looking statements Certain statements included or incorporated by reference within this presentation may be, or may be deemed to be, “forward-looking statements” in respect of the Group’s operations, performance, prospects and/or financial condition an
Slide 41: Forward looking statements & disclaimer
Forward looking statements & disclaimer Disclaimer Forward-looking statements speak only as at the date of this presentation. Except as required by applicable law or regulation (including to meet the requirements of the AIM Rules, the Market Abuse Regulation as it forms part of domestic law in the U