Performance during the year

Review of the business

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Overview

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(1) Net cash is cash less borrowings.

(2) Adjusted EBITDA is calculated as profit before tax, interest, depreciation, amortisation, share-based payment charges and exceptional items.

(3) Adjusted EBIT is calculated as profit before tax, interest, share-based payment charges, amortisation of acquired intangible assets and exceptional items.

(4) Adjusted profit before tax is calculated as profit before tax, excluding share-based payment charges and amortisation of acquired intangible assets and exceptional items.

(5) Adjusted diluted earnings per share is calculated as diluted earnings per share, adding back amortisation of acquired intangibles, share-based payment charges, exceptional items�and adjusting to 34% of the non-controlling interest as in previous years (see note 1 of the accounts).

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Group revenue for the year increased by 44% (44% CER) to �1.235 billion (2019: �856.9 million). Revenue growth across all territories and brands was strong.

Adjusted EBITDA was �126.5 million (2019: �84.5 million), an increase of 50% on the previous year, with efficiency improvements and effective marketing across the group leading to an adjusted EBITDA margin of 10.2% (2019: 9.9%). Profit before tax was �92.2 million (2019: �59.9 million), an increase of 54%. Adjusted diluted earnings per share was 5.88p, up 42% on the prior year (restated). Diluted earnings per share rose to 5.35p, an increase of 44% (2019 restated: 3.71p).

The group has continued to gain market share in key focus territories, with impressive revenue growth across our brands, driven by a combination of a great customer proposition, effective marketing strategies and strong social media presence. Through our scalable, multi-brand platform, we have taken on three additional brands - MissPap, Karen Millen and Coast - which have increased the group's market coverage and potential. Investments in technology and continuous systems improvements have delivered an enhanced customer experience and cost efficiencies.

Cash generation was strong, with operating cash flow of �127.3 million (2019: �111.9 million) and free cash flow up 26% to �81.7 million. Capital expenditure was �45.6 million including �19.4 million spent on the acquisition of the three new brands. Our net cash balance (cash less bank borrowings) at the period end increased to �240.7 million (2019: �190.7 million).

Distribution centres

The group operates through two distribution centres: the Burnley facility services all the group brands except PrettyLittleThing; and the Sheffield facility, which is managed by a third-party, services PrettyLittleThing. Automation at the Burnley warehouse went live in April 2019 and has been instrumental in improving and increasing efficiency throughout, enabling the facility to handle the rapid growth of the group and maintain high customer service levels. Phase 2 of the automation at Burnley is planned to commence in the first half of the 2021 financial year, further boosting the peak load capacity to ensure we continue our great customer service. Both facilities give us the scale and capacity required in the medium term as the group develops.

Technology

As we recently invested in a team focussed on expanding our in-house app development capabilities, we have been able to introduce improved app functionality and user experience at a faster pace, including adding apps for the three new brands acquired during the year. A greater percentage of our customers now use the apps for the entire browsing and purchasing journey, enabling us to provide them with more relevant and targeted marketing and an optimised user experience.

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boohoo (including boohooMAN)

Performance

Revenue for the year increased to �600.7 million, up 38% on the previous year, with continued growth in all our key focus markets.

Growth in both the UK and international markets has been strong, driving market share gains across key geographies. Gross margin decreased slightly by 30bps to 52.6%, as we optimised the customer proposition in each territory.

Product

Our womenswear product range has continued to be highly successful with growth in core product lines and in our comprehensive size offerings. In addition, new product introductions are delivering growth and satisfying consumer demand. In June we introduced our first dedicated recycled women's clothing range, which is part of our drive for a more sustainable future in fashion.�

Marketing

Our marketing strategy is constantly reviewed and re-aligned in response to data analytics that monitor its effectiveness. We continue to focus on a balanced mix of social media influencers, celebrity endorsements, digital acquisition and retention, PR and above-the-line brand campaigns. International marketing is supported by in-country experts to ensure we speak to customers with effective, localised campaigns and content.

Our worldwide social media audience now includes over seven million Instagram and three million Facebook followers. Throughout the year, we have worked with a host of local brand ambassadors as well as Jordyn Woods and four Victoria's Secret models as global ambassadors. All collections have featured an inspiring range of day-to-evening looks, emphasising the glamour of the boohoo brand.�

Customer interaction

boohoo and boohooMAN have a number of country-specific websites, several of which are translated into local languages and further site launches and translated foreign language sites are planned. We have invested in visual AI, popular payment methods and virtual assistants to offer a more satisfying customer experience. Our focus on excellent customer service is supported by an "excellent", 4.5 star, rating on the Trustpilot consumer review site.

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PrettyLittleThing

Performance

PrettyLittleThing ("PLT") achieved strong revenue growth of 38% over the previous year, reaching �516.3 million. Growth across all territories was strong, with the overseas markets performing exceptionally well. Gross margin has decreased to 55.6% (2019: 56.6%), as we optimise growth and refine the customer proposition.

Product

PLT brings the latest and most relevant celebrity looks at affordable prices to our customers, with a choice of over 26,500 styles and new items available daily. Our product range continued to expand during the year with further strong growth in the "shape" ranges including Petite, Curve and Plus. We have also further expanded our range, helping us to become established as a lifestyle brand for our customers. We are also growing our range of accessories and beauty offering. During the year, we brought the latest celebrity looks to customers through collaborations with Little Mix, Ashley Graham, Ashanti and through PLT's debut at New York Fashion Week, including a collection with US rap star Saweetie.

Marketing

We have extended our social media reach by increasing the number of social media influencers, combined with celebrity campaigns and collaborations. Using customer-created content and working in collaboration with our influencer partners, we have continued to be one of the fastest growing fashion brands on the channel. We have 12.3 million Instagram followers and 2.2 million followers on Facebook. We also continue to develop our exposure to new and emerging social media platforms.

Customer interaction

We support a number of country-specific websites. For the UK market, we offer a wide range of free return options and in international markets, we continue to offer a range of services to ensure a seamless customer experience.

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Nasty Gal

Performance

Revenue growth across all territories has been exceptionally strong, with an overall 106% increase to �98.8 million. USA revenue continues to grow strongly and remains the brand's largest territory. In the UK and internationally, growth has continued at an exceptional pace, with the brand gaining recognition and attracting a far-reaching customer base. Gross margin reduced to 54.2% (2019: 56.7%), which is in line with the re-alignment of the customer proposition.

Product

Nasty Gal's exciting product range now encompasses �over 16,000 styles, doubling in size over the year. Other key areas of growth include recycled ranges and further expansions of Nasty Gal Vintage, a great collection of sustainably-sourced, true reworked vintage product, drawing on the brand's heritage, unique DNA and a commitment by the group in terms of sustainability. Comprehensive size ranges have also helped support the inclusiveness of the brand and extend its appeal to women globally.

Marketing

The marketing strategy has focussed on building brand awareness, working with an increasing number of influencers to engage customer interest and promote brand loyalty. This summer we launched an iconic collection edited by Emily Ratajkowski (EmRata) and throughout the year have worked with high profile fashion collaborators Claire Rose Cliteur, Emma Louise Connelly and Josefine HJ. The autumn saw the biggest collaboration the brand has ever worked on, partnering with supermodel Cara Delavigne on our holiday collection.

On social media Nasty Gal has 4.4 million followers on Instagram and 1.3 million Facebook likes.

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MissPap, Karen Millen and Coast

Performance

We are very encouraged by the progress of our newly-acquired brands this year, all of which are resurging under new ownership and direction as online-only brands, with their great heritage intact. Revenue from the brands amounted to �19 million for the year, with MissPap revenue commencing in April 2019 and Karen Millen and Coast in October 2019. Gross margin was 51.1%.

Our investment in the new brands has incurred some set-up and initial running costs in the first year, which is consistent with our philosophy to invest in our brands in order to unlock their long-term growth potential. The new brands are operated through our multi-brand platform, which provides immediate efficiency in the key operational business functions, such as logistics, IT, e-commerce and administration. The new brands provide the group with a wider coverage in demographic, price points and age segments and are highly complementary to our existing portfolio.

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From strength to strength

Financial review

"The group has achieved a strong performance with revenues and profits increasing in all territories."

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Group revenue by brand

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Group revenue by geographical market

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KPIs

Group

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(1) Defined as having shopped in the last 12 months on the website

(2) Defined as number of website orders in last 12 months divided by number of active customers

(3) Defined as the percentage of website orders taken to internet sessions

(4) Calculated as gross sales including sales tax divided by the number of orders
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Consolidated income statement

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Operating costs comprise distribution costs and administrative expenses excluding depreciation and amortisation and have decreased by 120 bps to 43.7% of revenue, with efficiency improvements in distribution costs more than offsetting increases in infrastructure costs for future business expansion, including those for the three brands acquired during the year.

Adjusted EBITDA, which is not a statutory measure, represents earnings before interest, tax, depreciation, amortisation, non-cash share-based payments charges and exceptional items. It provides a useful measure of the underlying profitability of the business. Adjusted EBITDA increased by 50% from �84.5 million to �126.5 million and, as a percentage of revenue, increased from 9.9% to 10.2%.

Adjusted profit after tax, as with Adjusted EBITDA, provides another more consistent measure of the underlying profitability of the business by removing non-cash amortisation of intangible assets relating to the acquisition of new brands (being their trademarks and customer lists), share-based payment charges and exceptional items.

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Taxation

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The effective rate of tax for the year was 21.0% (2019: 20.7%), which is higher (2019: higher) than the blended UK statutory rate of tax for the year of 19.0% (2019: 19.0%), due to expenditure not deductible for tax purposes, being principally depreciation on buildings and fit-out.

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Consolidated statement of financial position

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The increase in intangible assets is due to the purchase of the new brands. The right-of-use-assets are the capitalised value of property leases in accordance with the new accounting standard, IFRS 16. The lease liability is the discounted value of future lease payments. Working capital has increased marginally as we are paying inventory suppliers to industry-leading 14-day terms.

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Intangible and fixed asset additions

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Liquidity and financial resources

Operating cash flow was �127.3 million compared to �111.9 million in the previous year and free cash flow was �81.7 million compared to �65.1 million in the previous financial year. We have adopted industry-leading 14-day payment terms with our key UK product suppliers. Capital expenditure and intangible asset purchases was �45.6 million, which includes a �14.9 million investment in our distribution centres to support projected growth in the business. The closing cash balance for the group was �245.4 million and the net cash balance (cash less bank borrowings), �240.7 million.

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Trends and factors likely to affect future performance

The market for online fashion is forecast to continue to grow and, along with the increasing use of the internet globally, provides a favourable backdrop for the group with much opportunity for further growth. Customers throughout the world are seeking a wide choice of quality products at value prices lower than those available on the high street with the convenience of home delivery. The group's target market has a high propensity to spend on fashion and, apart from times of pandemic, the market is resilient to external macroeconomic factors.

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As always, our focus is to maintain an outstanding customer proposition, with the latest fashion at great prices, combined with excellent customer service. To this end, we have a plan of continuous investment in our systems, infrastructure and technology to ensure we offer an optimal online shopping experience. International expansion will continue as we add more country-specific websites, refine our customer proposition and raise brand awareness through marketing and social media. Our scalable, multi-brand platform provides the basis for expansion of the group through strategic acquisitions. We are also committed to continuing to drive improvements across our environmental responsibilities and are constantly exploring ways to accelerate our sustainability journey.