boohoo group total group sales +61% since FY2020

boohoo group plc (LON:BOO) have today published final results for the year ended 28th February 2022.

Investing for the future

·    Significantly increased market share in the UK and US since FY2020. Total group sales +61% since FY2020

·    Extended target addressable market through acquisitions, with up to 500 million potential customers

·    Increased warehousing and distribution capacity, capable of supporting over £4 billion of net sales

·    Plans on track for automation of Sheffield warehouse going live in FY2023, driving material efficiencies, and opening of new distribution centre in the USA in FY2024, transforming delivery proposition

·    Strong revenue growth in the UK of 27% YOY, with product, price and proposition resonating with customers

·    £125 million of Adjusted EBITDA, down 28% vs. last year, and broadly flat vs two years ago, despite significant freight and logistics cost inflation and record investments across multi-brand platform

·    Capital expenditure of £261.5 million, funded using existing cash reserves, including freehold properties and the expansion and automation of the distribution network

   2022£ million2021£ millionChange on 20212020£ millionChange on 2020(1)
Revenue  1,982.81,745.3+14%1,234.9+61%
Gross profit  1,041.1945.2+10%666.3+56%
Gross margin  52.5%54.2%-170bps54.0%-150bps
Adjusted measures(3):       
   Adjusted EBITDA(4)  125.1173.6-28%126.6-1%
   % of revenue  6.3%10.0%-370bps10.2%-390bps
   Adjusted EBIT(5)  84.1149.3-44%107.0-21%
   % of revenue  4.2%8.6%-440bps8.7%-450bps
   Adjusted profit before tax(6)  82.5149.9-45%108.3-24%
   Adjusted diluted earnings per share(7)  4.39p8.67p-49%5.88p-25%
Statutory measures:       
Profit before tax  7.8124.7-94%92.2-92%
Diluted (loss)/earnings per share  (0.32)p7.25p-104%5.35p-106%
Net cash(2) at year-end  1.3276.0-£275m240.6-£239m
         

John Lyttle, boohoo Group CEO, commented:

“Over the past two years, we have significantly increased market share in our core geographies of the UK and the US, and we have grown active customer numbers by 43% across the group to 20 million. Our focus over the past two years has been on investing to build a strong platform, with the right infrastructure, supported by increased capacity to better serve our customers. In the year ahead we are focussed on optimising our operations through increasing flexibility within our supply chain, landing key efficiency projects and progressing strategic initiatives such as wholesale and our US distribution centre. This will ensure that the group is well-positioned to rebound strongly as pandemic-related headwinds ease.”

Summary of FY2022 performance

The group has delivered further revenue growth, with revenues up 14% vs. last year, and 61% compared to FY2020, at a time when apparel markets globally remain below pre-pandemic levels. In our largest market, the UK, growth has remained strong, compounding on the exceptional growth delivered in the previous year. This demonstrates the strength of the group’s business model when product, pricing and proposition are all strong, and is reflected in our strong customer KPIs.

Growth has however been impacted by three factors: firstly, returns rates increased significantly in the second half of the year ahead of both expectations and pre-pandemic levels; secondly, consumer demand has been subdued as a result of lockdowns in key markets throughout the year; and thirdly, our proposition internationally has been negatively impacted as a result of extended delivery times.

The group has continued to invest significantly through the last year, including rebuilding and relaunching four new brands in FY2022, incurring costs that will be leveraged in the coming years as the brands scale. Our distribution network has been extended through the opening of two new distribution centres and progress on our automation project in Sheffield, expected to go live in the new financial year, continues apace. We have also announced our intention to open a distribution centre in the USA to transform our customer proposition.

Adjusted EBITDA, at £125 million, has remained broadly flat compared to pre-pandemic levels and has declined compared to the excellent results delivered in FY2021, due to lower growth than anticipated, a significant increase in outbound carriage costs due to a lack of airfreight capacity and inbound shipping costs rising equally steeply, collectively impacting EBITDA by £60 million, as well as higher marketing costs as we invest in our newly acquired brands.

Financial highlights

·    Revenue £1.983 billion, up 14% (14% CER(8)), and up 61% on 2020

o  UK growth at 27% emphasises good brand positioning and strength of brand portfolio

o  International performance impacted by COVID-19 challenges, down 3%

·    Growth of 14% achieved while set against exacerbated comparative year, highlighting very strong two-year performance: UK up 77%; international up 40%

·    International revenue is now 39% of total (2021: 46%), reflecting strong organic UK growth and mix impact from brands acquired in the last two years

·    Gross margin 52.5%, down 170bps from 54.2% (2020: down 150bps)

·    Adjusted EBITDA £125.1 million down 28%, with Adjusted EBITDA margin of 6.3% (2021: 10.0%; 2020: 10.2%), after £60 million of pandemic-related shipping cost headwinds and investment in launching our new brands

·    £261.5 million capital expenditure investment, building infrastructure for growth, including freehold properties and significant expansion and automation of distribution network

·    Strong balance sheet with net cash of £1.3 million (2021: £276.0 million; 2020: £240.6 million). Operating cash flow of £10.3 million (2021: £201.1 million; 2020: £127.3 million). New £325 million RCF agreed in March 2022, underpinning the group’s investment programme.

Operational highlights

·    Significant investment into broadening our operational and warehouse capacity, ensuring global infrastructure is fit for the future and ready for sustained growth, and to support over £4 billion of net sales

·    20 million active customers, up 10%, and up 43% on 2020

·    Two new UK distribution centres, Daventry and Wellingborough, launched and now fully operational

·    Automation fit-out of Sheffield warehouse commenced with expected completion in September 2022, unlocking additional operational efficiencies and multiple service enhancements

·    Announcement of plans for US distribution centre in 2023, supporting the group’s next phase of growth

·    Relaunch of Debenhams, adding a new dimension of a digital department store to the group’s portfolio and extending the group’s target addressable market

·    Integration and relaunch of the newly acquired Dorothy Perkins, Wallis and Burton brands, complementary additions to the group’s scalable, multi-brand platform

·    Purchase of new offices in the heart of London’s West End, housing the group’s London-based brands and their employees

Sustainability and governance highlights

·    Agenda for Change process completed, with action items established into business as usual operations, following publication of fifth Leveson report in March 2022

·    Economic Impact Assessment conducted. Commitment to investing over £500 million and creating over 5,000 jobs over five years, highlighting the group’s significant ongoing contribution to the UK economy

·    Board strengthened with appointment of two non-executive directors, including one to chair the newly constituted ESG Committee

·    Publication of the group’s sustainability strategy, further establishing ongoing commitment to transparency. Significant progress made against our 2021 goals

Outlook and Guidance

Heading into the new financial year, the group is planning the business on the basis that the pandemic-related external factors impacting performance in FY2022 will continue for the year ahead. The group’s priorities therefore are focussing on optimising its operations, including:

·    Sourcing and freight

Targeting increased sourcing from near-shore markets, leveraging the flexibility that exists in the group’s diverse supplier base to reduce lead times that have been negatively impacted through global supply chain challenges in FY2022 and exposure to fluctuating inbound freight costs that remain elevated

·    Stock management and returns

Operating with lower levels of inventory through tighter stock management and increased levels of open to buy, giving greater flexibility to react to changes in demand mid-season. Whilst returns rates are expected to remain around current levels during FY2023, the group will annualise material increases in return rates in the first half of the new financial year.

·    Cost management

The group has commenced a cost efficiency programme, and by scaling recent acquisitions that have already received significant investment, overheads across the group can be leveraged.

·    Unlocking strategic enablers

Focusing resources and capital investment into key projects to support strategic growth, including: onboarding new wholesale partnerships; upgrading the Debenhams technology platform; going live with automation in our Sheffield distribution centre; and progressing our US distribution centre ahead of go-live in 2023

By focusing on these areas, the group will be in a position of greater financial and operational strength, and well-positioned to rebound strongly as pandemic-related headwinds ease, allowing it to capitalise on its significantly expanded target addressable market, returning towards normalised growth rates of 25% per annum post-pandemic and adjusted EBITDA margin rebuilding back to 10%.

For the financial year ending 28 February 2023, the group is focussed on retaining the significant market share gains that it has made over the course of the last two years. With current short-term cost inflation impacting consumers, the group intends to maximise efficiencies in its operating model and mitigate where possible before passing prices onto consumers.

It is anticipated that revenue percentage growth will be low-single digits, and adjusted EBITDA margins for the year are expected to be between 4% to 7% as the group expects to continue to be impacted by pandemic-related factors that negatively impact costs within its supply chain and international competitive proposition.

In the first half of the financial year, the trends impacting performance in the second half of FY2022 are expected to continue, including: uncertain consumer demand; tough comparatives as well as reduced levels of net sales growth due to the annualisation of elevated returns rates year on year; and sustained freight-related headwinds. As a result, the group currently expects revenue growth to be broadly flat in the first half of FY2023, as relatively higher returns rates lead to net sales being down year on year in the first quarter, with a return to growth in the second quarter. For the first half of FY2023, Adjusted EBITDA margins are expected to improve from the level achieved in the second half of H2 FY2022.

Performance is expected to improve in the second half of the year with sales growth accelerating as the group annualises high returns rates and normalising consumer demand, with profitability improving as it benefits from key strategic initiatives and leveraging of overheads.

Other financial guidance for FY2023 is outlined below:

·    Underlying depreciation and amortisation of approximately £60 million

·    Net interest charge of £7million to £8 million

·    Effective tax rate of circa 28%, above the rate of UK Corporation Tax due to disallowable expenditure

·    Capital expenditure of £100 million to £120 million, primarily relating to investments in our distribution network expansion and automation as well as the group’s technology platform; and

·    Adjusting items of approximately £60 million, of which around £45 million relates to non-cash items, including: share-based pay, acquisition intangible amortisation, exceptional costs of Sheffield automation and warehouse commissioning costs

Longer-term competitive positioning and opportunity to take market share unchanged

The group expects to emerge from the pandemic in a far stronger position compared to two years ago. Reflecting significant and ongoing investments in its platform, brands, distribution and people, the group has:

·    A broader portfolio of brands and a significantly larger target addressable market with 500 million potential customers across key markets

·    Greater infrastructure capacity capable of supporting in excess of £4 billion of net sales, with automation investments driving future efficiencies

·    Committed to opening a new distribution centre in the USA, significantly strengthening the customer proposition

·    20 million customers globally

·    Numerous growth opportunities through the group’s direct to consumer proposition, Debenhams and strategic partnerships with select partners globally.

We remain extremely confident in the group’s future growth prospects, and as short-term demand uncertainty and material cost headwinds as a result of the pandemic unwind, the group’s belief that it continues to be capable of executing its strategy aimed at leading the fashion e-commerce market remains unchanged.

Click to view all articles for the EPIC: ,
Or click to view the full company profile:
    Share on facebook
    Facebook
    Share on twitter
    Twitter
    Share on linkedin
    LinkedIn
    boohoo Plc

    More articles like this

    Lookers Plc

    Lookers shares are still undervalued says Zeus

    Lookers plc (LON:LOOK) has released an H1 trading update reporting a continuation of strong performance year to date. H1 2022 underlying PBT is expected to be c. £45m and Management anticipate full year PBT will also be ahead

    SysGroup plc

    SysGroup analyst Zeus forecast a 39.0% increase in revenue in FY23

    SysGroup plc (LON:SYS) is an award-winning provider of managed IT services, cyber security, cloud hosting and IT consultancy. The Group offers investors an attractive business model with high recurring revenue and a diversified customer base. SysGroup is competitively

    AFC Energy

    AFC Energy’s long term opportunity remains vast says Zeus

    AFC Energy plc (LON:AFC) has signed an agreement with another leading UK construction/infrastructure player, this time in Kier Group. We believe this further endorses our long term thesis that AFC will play an active role in encouraging the

    Inchcape

    Inchcape performance exceeding expectations says Zeus

    Inchcape plc (LON:INCH) has released another positive trading update, with performance exceeding expectations so far this year. This follows on from a positive Q1 update on 28 April. Through quarterly improvement in Distribution volumes and operating margin, the

    boohoo Plc

    Boohoo Group analyst Zeus sees a strong performance in Q1

    ¨ Q1 financial highlights: Boohoo Group plc (LON:BOO) revenue of £445.7m is -8.3% YOY vs. a strong comp (Q1 FY22 revenue +32.1%), in line with Zeus’s forecast and management’s previously stated guidance. Gross sales growth remained positive +9%

    AssetCo plc

    AssetCo performs better than forecasts says Zeus

    AssetCo plc (LON:ASTO) has just completed its acquisition of River and Mercantile Group “RMG”, which has resulted in an increase in shares in issue from 8.4m to 14.4m. RMG has an “established and well-respected equities team that manages

    Tatton Asset Management Plc

    Tatton Asset Management meeting or beating Zeus forecasts

    Tatton Asset Management plc (LON:TAM) results to March 2022 are in line with its April trading update, confirming profitable growth with high retention. Headlines are: ¨ Assets under management (“AUM”) rose 26.1% to £11.34bn (2021: £8.99bn) £1,277m net

    Castings plc

    Castings Plc outlook underpinned by new platforms says Zeus

    Castings plc (LON:CGS) FY22 results show a marked recovery on the pandemic impacted FY21 numbers with volumes broadly in line with pre-Covid levels, albeit c.5% below FY19 peak. Revenue increased 29.5% to £148.6m (FY21: £114.7m) with adj operating

    OnTheMarket Plc

    OnTheMarket “delivering on expectations” says Zeus

    OnTheMarket plc (LON:OTMP) full year results to January 2022 are in line with the February trading update: ¨ 32% rise in revenue to £30.4m (FY21: £23.0m); ¨ 12% rise in Group adjusted operating profit to £2.7m (FY21: £2.4m);

    DWF Group Plc

    DWF Group is significantly undervalued says Zeus

    DWF Group plc (LON:DWF) has announced it is on track to deliver our FY22 adjusted PBT forecast despite some challenges particularly on utilisation during H2. Lock up days also continue to fall, and we sense increasing confidence in

    No more posts to show