Boohoo Group Plc · LSE:DEBS
Boohoo — H1 FY24 Earnings Presentation
33 slides from Boohoo's earnings presentation, October 2023
Slide 1: Financial Results for the six months ended 31 August 2023
OCTOBER 2023 FINANCIAL RESULTS | For the six months ended 31August2023
Slide 2: Agenda
AGENDA HY 24 Shaun McCabe Financial Review John Lyttle Back to Growth 2
Slide 3: Financial Review
FINANCIAL Review Shaun McCabe – Group CFO 3
Slide 4: Financial Overview
FINANCIAL OVERVIEW HY 24 o Improved first half EBITDA margin o Strong working capital and inventory management o Significant cost savings underpin P&L cost investments o Disciplined projects, delivered on time on budget o Medium term EBITDA margin target unchanged 4
Slide 5: Delivering sustainable ROI
Delivering sustainable ROI Stock Management Cash Management Improvements in £94 million stock turn reduction in inventory Cost Out Disciplined Investment £125 million+ annualised Reinvesting savings into savings over FYs 24 - 25 growth opportunities 5 5
Slide 6: Key Financial Data
Key Financial Data Six months to end August (£m) HY24 HY23 Change Revenue 729 882 -17% Gross Profit 389 464 -16% Gross Margin 53.4% 52.5% 90bps Adjusted EBITDA 31 35 -12% Adjusted EBITDA Margin 4.3% 4.0% 30bps Net Cash / (Debt) -35 -10 -25 Inventory 176 270 -94 TIGHT COST & MARGIN CONTROL WITH IMPRO
Slide 7: First half revenue bridge
First half revenue bridge 1H23 Net Revenue 8% £882m Core brands* 7% 1H24 2% Net Revenue Profit focus on labels Marketplace -15% mix -17% *Core brands include: boohoo, boohooMAN, PrettyLittleThing, Karen Millen, Debenhams marketplace 7
Slide 8: Managing costs with opportunity ahead
Managing costs with opportunity ahead Six months to end August (£m) HY24 HY23 Change Marketing 90.0 93.6 -4% Distribution 164.8 212.3 -22% Admin Costs 103.2 122.2 -16% Operating Costs 358.0 428.1 -16% o Marketing reduced, deleverage from digital inflation & targeted investments o Distribution saving
Slide 9: Strong cash management underpins disciplined capital investments
Strong cash management underpins disciplined capital investments £310m £290m Aug-22 Profit Working Capex & Other Aug-23 Gross Cash Capital Investments Gross Cash 9
Slide 10: Disciplined investments on time, on budget
Disciplined investments on time, on budget INVESTMENT BENEFIT Warehouse automation Best in class logistics International distribution centre Step change customer proposition Technology stack Lower costs, greater speed and agility REINVESTING SIGNIFICANT SAVINGS TO DRIVE FUTURE GROWTH 10
Slide 11: FY24 Guidance
FY24 GUIDANCE o Revenues to decline between 12% and 17% due to slower volume recovery than anticipated and continued targeting of more profitable sales within labels o Adjusted EBITDA margins to be between 4% to 4.5% given the strong progress made on gross margin and cost control o Capex of approxim
Slide 12: Progress made against medium term targets
Progress made against medium term targets Investing in product, price, proposition Volume growth International growth Unlock input cost deflation Cost control MEDIUM TERM ADJUSTED EBITDA MARGIN TARGET 6-8% UNCHANGED 12
Slide 13: Strategic Update
STRATEGIC Update John Lyttle – Group CEO
Slide 14: Executing Back to Growth strategy is our #1 priority
Executing Back to Growth strategy is our #1 priority Investing for growth Delivering Customer first sustainable ROI Latest trends US warehouse International growth Outstanding value Automation Rebuilding profitability Great experience Leaner, lighter, faster Cash management 14
Slide 15: Key strategic milestones delivered in H1
Key strategic milestones delivered in H1 Customer first Investing for growth Delivering sustainable ROI Faster lead times US DC launched Increase in margin Price investments Automation payback Unlocking savings Tech re-platforming Scaling marketplace Unchanged medium term guidance 15
Slide 16: Reinforcing value credentials
Reinforcing Value credentials Increasing product mix at entry price points Average UK market boohoo group Selling Price AUG 22 +8% -1% 68% 63% AUG 23 1H23 1H24 Source: Kantar, 24 weeks to 20 Aug 2023 for UK clothing ASP change year on year Entry price product mix represents data for womenswear brand
Slide 17: Leaner, lighter, faster
Leaner, lighter, faster H1 FASHION TRENDS Occasionwear Denim Swim, holiday, casual Backing more winners KM / Coast Any brand Boohoo images Improved lead times occasion images images Faster stock turn Relevant, fresher inventory 17
Slide 18: Efficiency with Automation
Efficiency with Automation o 7x increase in unit pick rate from 65 to over 450 o Significant savings in first 12 months o Staff retention significantly improved 18
Slide 19: US proposition transformed
US proposition transformed PRE GO-LIVE POST GO-LIVE AMBITION Faster, consistent delivery 1.6x Conversion uplift UK customer more New customer acquisition likely to purchase vs US customer Customer frequency 19
Slide 20: Our US Opportunity
Our US Opportunity o Market opportunity is HUGE o Local infrastructure and capability now in place o Enhanced customer proposition o Investing to drive awareness and acquisition Aug ’23: Sept ’23: Summer ’24: Autumn ’24: PLT Nasty Gal Boohoo Karen Millen go live go live launch launch 20
Slide 21: Marketplace GMV
SIGNIFICANT PROGRESS MADE IN FASHION, HOME & BEAUTY 3/ Rapid TRIPLE-DIGIT % Marketplace GMV INCREASE IN GMV Creating a partner platform for on-boarding brands & customers 1/ 2/ More choice Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 for our customer PROFITABLE & ON TRACK TO DELIVER RECORD MARKETPLACE
Slide 22: Key strategic milestones delivered in H1
Key strategic milestones delivered in H1 Customer first Investing for growth Delivering sustainable ROI Faster lead times US DC launched Increase in margin Price investments Automation payback Unlocking savings Tech re-platforming Scaling marketplace Unchanged medium term guidance 22
Slide 23: Appendices
APPENDICES 25
Slide 24: Customer KPIs
CUSTOMER KPIs 6 months to Aug 1H 24 1H 23 Chg Active Customers 17.0m 19.2m (12%) Number of Orders 23.2m 28.3m (18%) Order Frequency 2.98x 3.21x (7%) Conversion rate to sale 3.4% 3.6% (20bps) Average Order Value £53.30 £53.85 (1%) Items per basket 2.98 2.95 1% Back to growth24
Slide 25: Revenue by Period: 1H 24
REVENUE BY PERIOD: 1H 24 £m 3m to 31 May 3m to 31 August 6m to 31 August FY24 FY23 YOY % YOY % CER FY24 FY23 YOY % YOY % CER FY24 FY23 YOY % YOY % CER Total 370.1 445.7 -17% -17% 359.0 436.7 -18% -18% 729.1 882.4 -17% -18% UK 221.2 272.1 -19% -19% 220.1 272.5 -19% -19% 441.3 544.6 -19% -19% ROE 43.4
Slide 26: Revenue by Period: FY23
REVENUE BY PERIOD: FY23 £m 4m to 31 December 2m to 28 February 12m to 28 February FY23 FY22 YOY % YOY % CER FY23 FY22 YOY % YOY % CER FY23 FY22 YOY % YOY % CER Total 637.7 714.5 -11% -13% 248.6 292.4 -15% -17% 1,768.7 1,982.8 -11% -13% UK 400.8 451.0 -11% -11% 146.1 182.4 -20% -20% 1,091.5 1,202.8 -
Slide 27: Operating Costs
OPERATING COSTS 6 months to Aug (£m) H1 24 H1 23 Chg Marketing 90.0 93.6 -4% Distribution 164.8 212.3 -22% Other Admin 103.2 122.2 -16% Total 358.0 428.1 -16% Marketing 12.3% 10.6% 170bps Distribution 22.6% 24.1% -150bps Other Admin 14.2% 13.8% 40bps Total 49.1% 48.5% 60bps Back to growth27
Slide 28: Group Balance Sheet
GROUP BALANCE SHEET 6 months to Aug (£m) 1H 24 1H 23 Intangible assets 129 131 Property, plant and equipment 374 359 Right-of-use assets 125 61 Financial assets 1 1 Investments & Associates 27 7 Deferred tax 24 7 Non-current assets 680 566 Working capital -113 -23 Lease liabilities -127 -63 Net fina
Slide 29: Group Cash Flow
GROUP CASH FLOW 6 months to Aug (£m) 1H 24 1H 23 Profit for the year -22 -15 Share based payments 11 13 Depreciation and Amortisation 41 32 Finance income -6 -1 Finance expense 11 4 (Gain) / Loss on assets, FX hedging & investments -20 0 Tax expense -4 -1 Change in working capital 10 8 Operating cas
Slide 30: Financial Calendar
FINANCIAL CALENDAR EVENT DATE Peak Trading Update January 2024 (TBC) FY24 Preliminary Results May 2024 (TBC) Back to growth30
Slide 31: Glossary
GLOSSARY Calculated as PBT, interest, depreciation, amortisation, share-based payment ADJUSTED EBITDA charges and exceptional items Calculated as EBIT excluding share-based payment charges, amortisation ADJUSTED EBIT of acquired intangible assets and exceptional items Calculated as PBT, excluding sh
Slide 32: Forward Looking Statements
FORWARD LOOKING STATEMENTS This Presentation contains statements, included or incorporated by reference, which may be, or may be deemed to be, “forward-looking statements” in respect of the Group’s operations, performance, prospects and/or financial condition and other matters that are not historica
Slide 33: 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 United Kingdom by virtue of the European