TIDMBOO
RNS Number : 8686V
boohoo group plc
16 December 2021
FOR IMMEDIATE RELEASE 16 DECEMBER 2021
The information contained within this announcement is deemed by
the company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014 as it forms part of the
domestic law of the United Kingdom by virtue of the European Union
(Withdrawal) Act 2018 (as amended) ("UK MAR"). Upon the publication
of this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.
boohoo group plc - Trading Update
("boohoo" or "the Group")
Boohoo today provides an update for the three months to 30
November 2021 ("the Period").
Boohoo has seen gross demand growth in the Period exceed that
achieved in each of the first and second quarters of the financial
year, however expectations for the financial year ending 28
February 2022 will be lower than previously guided. This is as a
consequence of significantly higher returns rates impacting net
sales growth and costs, with continued disruption to our
international delivery proposition impacting international demand,
and significant ongoing pandemic-related cost inflation.
It is the view of the board that the factors currently
negatively impacting the business are primarily related to the
ongoing impact of the pandemic and are, therefore, transient in
nature.
Three months to 30 November Nine months to 30 November
GBP million FY22 FY21 1 Year 2 Year FY22 FY21 1 Year 2 Year
Change Change Change Change
----------------- ------ ------ -------- -------- --------- --------- --------- --------
Group total net
sales 506.2 460.7 10% 53% 1,482.1 1,277.1 16% 65%
----------------- ------ ------ -------- -------- --------- --------- --------- --------
By region
UK 320.3 243.6 32% 78% 889.8 673.7 32% 80%
ROE 53.9 61.2 -12% 15% 158.8 185.0 -14% 18%
USA 104.6 121.3 -14% 36% 355.1 323.5 10% 89%
ROW 27.4 34.6 -21% -4% 78.3 95.0 -17% -2%
----------------- ------ ------ -------- -------- --------- --------- --------- --------
Overview
-- Gross sales up 28% in the three-month period, net sales up 10%
-- Exceptional UK demand, validating the strength of our
business model where our leading proposition across price, product
and service continues to resonate strongly with customers across
our brand portfolio
o UK gross sales up 58% vs FY21; 102% vs FY22
o UK net sales up 32% vs FY21; 78% vs FY20
o Net sales impacted by returns rates that are 12.5 percentage
points higher than last year, and 7 percentage points higher than
pre-pandemic levels driven by an exceptionally high dress mix
-- International performance across the Group's brands and
markets impacted by significantly longer customer delivery times as
a result of the pandemic, with all of our international sales
currently fulfilled from our UK distribution network
o Having seen strong signs of a recovery in September, revenue
in Europe has declined in the latter months of the Period with
increased consumer uncertainty
o Performance in the US has not seen the recovery previously
anticipated due to the continued impact of reduced air freight
capacity on delivery times to customers
-- Significant and ongoing pandemic related inbound freight cost
inflation impacted gross margin in the Period, down 100bps year on
year. This is estimated to impact EBITDA by approximately GBP20
million in the financial year, the majority of which is in the
second half
-- Strong balance sheet with current liquidity of over GBP170
million and net cash of GBP70 million
-- The Group continues to invest in building a distribution
network capable of supporting in excess of GBP5 billion of net
sales, with our first US distribution centre expected to go live in
2023, and we are considering options to expedite this process.
Guidance and Outlook
For the year ending 28 February 2022, the Group now expects net
sales growth to be 12% to 14%, compared to previous guidance of 20%
to 25% growth. This reflects our expectation that the factors
impacting our performance in the Period persist through the
remainder of the financial year, and recent developments
surrounding the Omicron variant could pose further demand
uncertainty and elevated returns rates particularly in January and
February.
Adjusted EBITDA margin for the year is expected to be 6% to 7%,
compared to previous guidance of 9% to 9.5%, implying adjusted
EBITDA of between GBP117 million to GBP139 million. This is due to
significantly higher returns rates impacting net sales growth and
costs, with continued extended delivery times impacting
international demand, consequently driving lower returns on
marketing expenditure, and significant ongoing pandemic-related
inbound freight cost inflation.
The Group expects to incur cash exceptional items for the year
of around GBP33 million, compared to GBP22.5 million previously
guided, primarily due to warehouse and new brand restructuring.
The Group remains highly confident about its future growth
prospects given the exceptional growth achieved in the UK where our
leading proposition across price, product and service continues to
resonate strongly with customers across our brand portfolio. The
Group continues to make significant investment into its
infrastructure, including progressing plans for its US distribution
centre, to support its future international growth ambitions with a
network capable of delivering in excess of GBP5 billion of net
sales, and returning towards normalised growth rates of 25% per
annum post-pandemic.
In addition, the Group's confidence in its medium-term margin
guidance for 10% Adjusted EBITDA margin is unchanged, with
financial performance this financial year containing costs that are
pandemic-related which will unwind, as well as our investment into
recently acquired brands and the Debenhams platform that will
leverage as they scale. These costs consist of:
-- inbound freight cost inflation of approximately GBP20 million;
-- outbound freight cost inflation of approximately GBP45
million as a consequence of higher carriage rates compared to
pre-pandemic levels; and
-- start-up costs of approximately GBP10 million into the brands acquired earlier this year
John Lyttle, Group CEO, commented:
"The strong performance in our core UK market, across both our
established and acquired brands, demonstrates the potential to
capture and grow market share in key markets. In international
markets, our proposition continues to be significantly impacted by
ongoing service disruption due to the pandemic, which, in addition
to increased recent consumer uncertainty, has weighed on our
performance.
The Group has gained significant market share during the
pandemic. The current headwinds are short term and we expect them
to soften when pandemic related disruption begins to ease. Looking
ahead, we are encouraged by the strong performance in the UK, which
clearly validates the boohoo model. Our focus is now on improving
the international proposition through continued investment in our
global distribution network, capable of delivering in excess of
GBP5 billion of net sales, to support future growth."
Investor and Analyst conference call
boohoo group plc will today host a conference call for analysts
and investors at 7.30 am GMT, and a recording of this conference
call will be available later today on the boohoo group plc investor
website: http://www.boohoogroupplc.com
The dial in details for the call are as follows:
UK Number: +44 (0)330 336 9601
Participant pin
code: 9556144
Notice of trading update
The Group intends to provide a trading update for the year
ending 28 February 2022 in early March 2022.
-ends-
Enquiries
boohoo group plc
Neil Catto, Chief Financial Officer Tel: +44 (0)161 233 2050
Alistair Davies, Investor Relations Tel: +44 (0)161 233 2050
Clara Melia, Investor Relations Tel: +44 (0)20 3289 5520
Mark Mochalski, Investor Relations Tel: +44 (0)20 3239 6289
Zeus Capital - Nominated adviser and
joint broker
Nick Cowles / Andrew Jones Tel: +44 (0)161 831 1512
Benjamin Robertson Tel: +44 (0)20 3829 5000
Jefferies - Joint broker
Philip Noblet / Max Jones Tel: +44 (0)20 7029 8000
Buchanan - Financial PR adviser boohoo@buchanan.uk.com
Richard Oldworth / Kim Looringh-van Tel: +44 (0)20 7466 5000
Beeck / Toto Berger / Sophie Wills
About boohoo group plc
"Leading the fashion eCommerce market"
Founded in Manchester in 2006, boohoo is an inclusive and
innovative global brand targeting young, value-orientated
customers, pushing boundaries to bring its customers up-to-date and
inspirational fashion, 24/7.
In 2017, the group extended its customer offering through the
acquisitions of the vibrant fashion brand PrettyLittleThing and
free-thinking brand Nasty Gal. In March 2019, the group acquired
the MissPap brand, in August 2019 the Karen Millen and Coast brands
and in June 2020 the Warehouse and Oasis brands, all complementary
to the group's scalable, multi-brand platform. In January 2021, the
group acquired the intellectual property assets of Debenhams, with
the goal of transforming a leading UK fashion and beauty retailer
into a digital department store and marketplace through a new
capital-light and low-risk operating model. In February 2021, the
group acquired the intellectual property assets of UK brands
Dorothy Perkins, Wallis and Burton. As at 31 August 2021, the
boohoo group had 19 million active customers across all its brands
around the world.
Cautionary Statement
Certain statements included or incorporated by reference within
this announcement may constitute "forward-looking statements" in
respect of the group's operations, performance, prospects and/or
financial condition. Forward-looking statements are sometimes, but
not always, identified by their use of a date in the future or such
words and words of similar meaning as "anticipates", "aims", "due",
"could", "may", "will", "should", "expects", "believes", "intends",
"plans", "potential", "targets", "goal" or "estimates". By their
nature, forward-looking statements involve a number of risks,
uncertainties and assumptions and actual results or events may
differ materially from those expressed or implied by those
statements. Accordingly, no assurance can be given that any
particular expectation will be met and reliance should not be
placed on any forward-looking statement. Additionally,
forward-looking statements regarding past trends or activities
should not be taken as a representation that such trends or
activities will continue in the future. No responsibility or
obligation is accepted to update or revise any forward-looking
statement resulting from new information, future events or
otherwise. Nothing in this announcement should be construed as a
profit forecast. This announcement does not constitute or form part
of any offer or invitation to sell, or any solicitation of any
offer to purchase any shares or other securities in the Company,
nor shall it or any part of it or the fact of its distribution form
the basis of, or be relied on in connection with, any contract or
commitment or investment decisions relating thereto, nor does it
constitute a recommendation regarding the shares or other
securities of the Company. Past performance cannot be relied upon
as a guide to future performance and persons needing advice should
consult an independent financial adviser. Statements in this
announcement reflect the knowledge and information available at the
time of its preparation. Liability arising from anything in this
announcement shall be governed by English law. Nothing in this
announcement shall exclude any liability under applicable laws that
cannot be excluded in accordance with such laws.
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END
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