boohoo group plc – trading statement for the three months to 31 May 2022
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Three months to 31 May |
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£ million |
FY23 |
FY22 |
Change on FY22 |
CER(1) |
Change on FY20 |
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Group total revenue |
445.7 |
486.1 |
-8 % |
-8% |
+75% |
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Revenue by region |
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UK |
272.1 |
274.6 |
-1% |
-1% |
+94% |
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ROE(2) |
49.6 |
54.4 |
-9% |
-7% |
+30% |
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USA |
95.0 |
131.9 |
-28% |
-26% |
+85% |
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ROW(3) |
29.0 |
25.2 |
+15% |
+15% |
+20% |
(1) CER designates Constant Exchange Rate translation of foreign currency revenue. (2) ROE is rest of Europe. (3) ROW is rest of world.
Financial highlights
· Due to lockdowns driving prior year comparative strength, and in line with prior guidance, revenues declined 8% in the quarter, but up 75% over the three-year pre-pandemic period reflecting multi-year market share gains across the Group's multi-brand platform
· As expected, gross demand growth remained positive against tough comparatives, +9% year-on-year, with net sales impacted by the ongoing normalisation of returns due to product mix change
· UK sales improved month-on-month in the period and returned to net sales growth in May. Underlying gross demand remained strong +21% as our leading proposition continues to resonate with customers
· International performance continued to be impacted by increased delivery times, although wholesale drove growth in ROW and contributed to ROE's performance
· Gross margin for the three months 52.8%, down 220bps vs. a strong prior year comparative, but up 240bps vs. the second half of the previous financial year, and improved through the quarter
Progress against strategic priorities
At the full year results in May, the Group outlined a series of actions focussed on optimising its operations and best positioning itself to rebound strongly as pandemic-related headwinds ease, and is pleased with the continued progress made in these areas, as outlined below:
· Sourcing and freight
The Group has continued to increase sourcing from near-shore markets to reduce exposure to elevated inbound freight costs, with a 10 percentage point increase in short-lead time product mix compared to the same period last year
· Stock management and returns
Inventory has been tightly controlled in the quarter, with lower levels of stock compared to year end and improvements in inventory turn and increased supply chain flexibility
· Cost management
Overheads continue to be managed tightly despite the significant inflationary backdrop through scaling of acquisitions and improved marketing efficiencies
· Unlocking strategic enablers
Continued progress has been made on key strategic projects, with the automation project in Sheffield still anticipated to go-live in H2 of this financial year. The Group has signed a lease for a new distribution centre in Elizabethtown, Pennsylvania, to support its international growth ambitions and transform the customer proposition in a key focus market, with go-live still anticipated in mid-2023. Wholesale continues to scale with one UK partnership launched in the quarter.
Guidance
The Group's outlook for the year ending 28 February 2023 remains unchanged. R evenue growth for FY23 is expected be low-single digits, with a return to growth in Q2 and growth rates improving in the second half of the year as the Group annualises high returns rates and normalising consumer demand. Adjusted EBITDA margins are expected to be between 4% and 7%, in line with prior guidance, as the Group continues to be affected by pandemic-related and inflationary factors that negatively impact costs within its supply chain and international competitive proposition, offset to some extent by the financial benefits from our strategic priorities and leveraging of overheads.
John Lyttle, CEO, commented:
“I am pleased with the progress we are making towards our strategic priorities, which is already having a meaningful impact operationally within the business. We have seen promising signs from the Group's sales performance in the UK, which has improved month-on-month in the period and we are looking ahead towards our key summer trading season as holidays ramp up and customers look to the latest fashion from across our brands. Looking forward, we will continue to focus on optimising both our financial and operational performance to ensure the business is well placed to take advantage of future growth opportunities.”