For Immediate Release                                                                 27 September 2016

boohoo.com plc - Interim results for the six months ended 31 August 2016

"The Global Fashion Leader for a Social Generation"

 (1): EBITDA (adjusted) excludes equity-settled share based payment costs of £0.5m (2015: £0.3m)

Highlights for the six months to 31 August 2016

·     Revenue up 40% (41% CER⁽²⁾)

o  UK up 38%, rest of Europe up 41% (41% CER), USA up 93% (81% CER), rest of world up 17% (27% CER)

o  International now represents 36% of total revenue

·     Gross margin 55.3%, down 480bps (350bps due to planned investment in price and promotions, with retail gross margin being 57.0%; and 130bps due to third party⁽³⁾ revenue)

·     EBITDA (adjusted) was 13% of revenue (2015: 8.4%), reflecting efficiency improvements

·     Broader product range driving growth

·     4.5m active customers⁽⁴⁾, up 28% on prior year

·     Strong balance sheet with net cash of £67m

 (2): CER designates Constant Exchange Rate translation of foreign currency revenue

 (3): Third party includes revenue from other channels and wholesale sales to retailers

 (4): Active customers defined as having shopped in the last year

Mahmud Kamani and Carol Kane, joint CEOs, commented:

"We are pleased to report a strong performance in the first half of the year, with robust growth across all regions and continued momentum in new customer growth.

Our inclusive brand, unbeatable choice, together with our incredible prices and fantastic service, continue to inspire and appeal to young customers around the world. Through our constant focus on what matters to our customers, together with our investment in technology and operational improvements, we will continue to deliver profitable growth.

 As a result of our continued momentum in the UK and encouraging growth in selected overseas markets, we now expect revenue growth for the full year of between 30% and 35%, reflecting tougher second half comparatives.  Following the success in the first half of the year we will continue to look for opportunities to invest in marketing campaigns and our customer proposition to drive future sales growth and improve customer lifetime value. We will also be making significant investments in our IT systems and Ecommerce platforms. Consequently EBITDA margin for the full year is expected to be around 11%."

Investor and Analyst Meeting

A meeting for investors and analysts will be held at the offices of Buchanan, 107 Cheapside, London, EC2V 6DN on 27 September 2016, commencing at 9.00am. A webcast will be available following the presentation via the following link: http://vm.buchanan.uk.com/2016/boohoo270916/registration.htm

boohoo.com plc's Interim Results 2017 are available at www.boohooplc.com .

Enquiries

About boohoo.com

"24/7 Global Fashion"

Keeping one step ahead of the trends or making a subtle style change is easy with boohoo.com and with up to 100 new pieces hitting the site every day and a new collection each week, boohoo.com never stops - it is 24/7 fashion at its best.

From the UK's best kept fashion secret to one of the fastest growing own-brand, international etailers, boohoo.com has quickly evolved into a global fashion leader of its generation.  Combining cutting-edge, aspirational design with an affordable price tag, boohoo.com has been pushing boundaries since 2006 to bring its customers all the latest looks for less.

This announcement has been determined to contain inside information. 

Business review

Performance during the 6 months to 31 August 2016

Revenue growth across all geographic regions continued at a strong pace. In the UK, our largest market, revenue growth was 38%, whilst in Europe growth was 41% (CER 41%). The USA continued to grow very strongly at 93% (CER 81%) and rest of the world growth was 17% (CER 27%).

Currency exchange movements since the EU referendum have not significantly affected results due to foreign exchange hedges placed several months earlier in accordance with our rolling hedging programme, although weaker sterling does provide the opportunity to use promotional activity to generate incremental international sales over and above hedged transactions. With an element of many product prices being dollar-based, it remains to be seen what the longer term effect of continued sterling weakness might be in the supply chain.

Gross margin was 55.3% (2015: 60.1%) reducing by 480bps, of which 350bps was in line with our strategy of increased investment in price and promotions. A further 130bps was driven by a greater proportion of lower margin third party sales (revenue from other channels and wholesale sales to retailers). Retail gross margin was 57.0% (2015: 60.5%). Marketing expenditure decreased to 6.3% of revenue compared to 12.6% in the comparable half year, as we stimulated growth through greater use of price and delivery promotions.

Adjusted EBITDA was £16.5 million (2015: £7.6 million), an increase of 117% on the prior year, and profit before tax was £14.4 million (2015: £6.3 million), an increase of 129%.

Fashion

We aim to be the best-priced brand in fashion and with a range of over 20,000 styles we always have something to offer every taste in style and from the latest trends. With 100 new styles on site every day, the offering is continuously fresh and exciting. Our test-and-repeat model reduces stock holding risk, whilst rapid response enables us to reorder strong selling lines to quickly satisfy demand.

Our core womenswear ranges of dresses, tops, jackets and footwear have continued to perform strongly, whilst other products from the expanded range are generating robust revenue growth: plus-size and petite have grown strongly and attained a high level of revenue and the more recently-introduced tall and lingerie ranges have made a very promising start.

Fashion advice and lifestyle commentary is energetically presented in the "Stylefix" section of the website. Here, female customers can enjoy keeping up with fashion trends in a highly engaging lifestyle media stream, watch videos and read interesting articles by bloggers.

Our menswear range is expanding and, since early 2016, has been sold from a separate menswear website in addition to the main site. This has enabled us to offer a proposition more relevant to the male audience, with added celebrity contributions, fashion advice and lifestyle articles in the "Manual" section. Menswear is showing great promise, with monthly sales at the end of the first half double those at the start, and continuing to grow strongly.

In the second half year we will be introducing a range of children's clothing for girls and boys in the 5 to 12 age range and also a small maternity range.

Marketing

Marketing activity has continued with the highly successful "WeAreUs" campaigns, through TV, media events and social media channels. Bloggers and influencers also contribute via social media to generate an inclusive and engaging experience for our social media savvy customers, with great photography and interesting articles promoting the brand and the latest products. Our "Style Squads" comprise over 60 bloggers and influencers across our key geographic markets.

In July we announced another celebrity fashion collaboration with international curve model and blogger Jordyn Woods, which we expect will be highly effective in the growing US market. In August we held our launch party for this new collaboration in Los Angeles.  The event was covered extensively in the media and attracted many celebrities and influencers including Kylie Jenner, Jaden Smith and Hailey Baldwin.  In April we staged pop-up shops, one in Los Angeles, generating much interest in California amongst the extensive student population, and one in Paris, supporting the growing French market. In the UK we sponsored Graduate Fashion Week and staged a number of media events, driving further awareness of the brand.

In early spring we launched the boohooMAN.com website, with the reality TV personality and celebrity Big Brother contestant Scotty T fronting promotional activity. This has contributed to an acceleration in menswear sales, supported by a continuously increasing product range and marketing activity focussed on the young male audience. We have also started a series of shoots with key influencers, the latest being with actor and P-Diddy's stepson, Quincy Brown.

Improvements in the efficiency of our acquisition marketing spend have also been realised with the use of more advanced analytical tools and techniques. We have also stepped up our activity on social media on Facebook Live and on Snapchat and a content drive on Instagram has helped us pass the 2 million follower mark in the UK.

Customer interaction

Active customers, who shopped with us in the 12 months to 31 August 2016, rose to 4.5 million, an increase of 28% on the same period a year ago. The number of website sessions grew strongly by 32% on the previous 12 months to 241 million sessions.  Order frequency has risen by 7.7%, with customers buying, on average, 2.1 times in 12 months and conversion rate to sale improved from 3.8% to 3.9% of sessions. On social media we have 0.5 million followers on Twitter and a reach of 7.9 million, 3.8 million followers on Instagram, 2.3 million Facebook likes and a reach of 2.8 million and 3.2 million views recorded on YouTube.

Our multi-lingual customer service team responds to customer queries from a variety of platforms and aims for excellence in response time and problem resolution. Our performance is constantly measured internally and we monitor external customer review websites such as Trustpilot to ensure we maintain best-in-class standards. We have introduced web-chat in the UK, which is proving highly effective and is receiving a high satisfaction rating from customers.

boohoo.com customers are able to choose from a range of delivery options, which we are constantly refining as new opportunities become available. We operate a midnight cut-off for next day delivery, Sunday delivery and collect+ returns in the UK. In the second half of the year we have introduced boohoo Premier, which offers an unlimited next day delivery service in the UK for an annual fee, and has received a very favourable customer response.

Technology

The Android and iPhone Apps introduced in the UK, USA and Australia in early spring are being utilised increasingly by customers, with 1.4 million downloads to date. Mobile and tablet use continues to rise and now accounts for 72% of sessions.

We are planning to expand the number of market places in which we are present in the second half and to improve personalisation by territory and device to enhance the customer experience.

These new channels are facilitated by our systems architecture, built around the concept of multiple customer channels supported with common infrastructure. Around this architecture, we will make significant investments in the latest sophisticated and most stable platforms in the second half of the year. On-going refinements contribute to an ever-improving customer experience.

Warehouse

Three more mezzanine floor layers, expanding capacity by another 275,000 square feet to 525,000 square feet total capacity, are now in use in the warehouse, with capacity sufficient for medium term future growth. A second warehouse extension, which will incorporate a significant amount of automation, is now at the planning stage.

People

Sara Murray joined the board as a non-executive director in April and Mark Newton-Jones stepped down from the board in July. We thank Mark for his contribution during a key developmental phase of the company's history.

The senior management team remained unchanged during the period, following a number of senior appointments last year. We appointed a number of skilled middle-management positions and undertook several large-scale training and development programmes as part of our up-skilling and retention policy for staff development.

The rate of growth in revenue has required an increase in personnel in the volume-related functions in customer service and warehousing. The total permanent workforce now stands at 1,235, up from 1,015 at 29 February 2016.

Pretty Little Thing

The company has an option to acquire the business of "PrettyLittleThing" before March 2017 and management is evaluating all aspects of a potential acquisition, the related management incentive and how the business will be best integrated and managed as part of the boohoo group.
 

Financial review

We have continued to drive strong customer growth through our price, promotional and marketing strategy in the first half of the year, whilst achieving good margins. By leveraging overheads, our profitability has also improved.

Sales revenue by geographical market

In sterling equivalent and at constant exchange rates (CER), all regions showed robust growth compared with the same period last year.

KPIs

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

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

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

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

Our business is continuing to attract new customers and retain existing customers, with active customer numbers increasing by 28% compared to the comparative period in FY16. Customers are buying more often from us, with order frequency increasing by 7.7% to an average of 2.11 purchases in a year, and conversion rates have also increased to 3.9%. Average order value has risen by 9.6% to £37.16, whilst the number of items per basket increased by 4.4% to 2.86.

Consolidated income statement

Reported gross margin reduced from 60.1% to 55.3%, due to keener pricing and higher promotional discounts driving demand and an increased proportion of lower margin third party sales.

Distribution costs and certain administrative expenses have increased due to sales volume-related costs, whilst the remaining overheads have decreased as a percentage of revenue.

EBITDA (adjusted) increased by 117% from £7.6m to £16.5m.
 

Statement of financial position

Net assets have increased by £7.7m compared to 12 months ago. The movement in working capital was less negative than 12 months ago due to taking early settlement discounts from suppliers and higher receivables from third party sales.

Liquidity and financial resources

Free cash flow was £10.6m compared to £7.4m in H1 2016. In the first half of the year, inventories increased, due to the requirement to hold more products to serve our growing customer base, and receivables, payables and accruals increased in line with trading activity. Capital expenditure was £6.6m as we have continued to invest in our warehouse and IT systems to support projected growth in trade. The closing cash balance was £67.1m.

Fixed and intangible asset additions

Outlook

We are pleased to report a strong performance in the first half of the year, with robust growth across all regions and continued momentum in new customer growth.

Our inclusive brand, unbeatable choice, together with our incredible prices and fantastic service, continue to inspire and appeal to young customers around the world. Through our constant focus on what matters to our customers, together with our investment in technology and operational improvements, we will continue to deliver profitable growth.

 As a result of our continued momentum in the UK and encouraging growth in selected overseas markets, we now expect revenue growth for the full year of between 30% and 35%, reflecting tougher second half comparatives.  Following the success in the first half of the year we will continue to look for opportunities to invest in marketing campaigns and our customer proposition to drive future sales growth and improve customer lifetime value. We will also be making significant investments in our IT systems and Ecommerce platforms. Consequently EBITDA margin for the full year is expected to be around 11%.

27 September 2016
 

Unaudited consolidated statement of comprehensive income

for the 6 months ended 31 August 2016

All activities relate to continuing operations.

Unaudited consolidated statement of financial position

at 31 August 2016

Unaudited consolidated statement of changes in equity

for the 6 months ended 31 August 2016

Unaudited consolidated cash flow statement

for the 6 months ended 31 August 2016

Notes

(forming part of the interim report and accounts)

The interim condensed financial statements for the six months ended 31 August 2016 have been prepared in accordance with IAS 34, "Interim Financial Reporting" as adopted by the European Union. The interim financial statements should be read in conjunction with the group's Annual Report and Accounts for the year ended 29 February 2016, prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs"), IFRIC Interpretations and the Companies (Jersey) Law 1991 applicable to companies reporting under IFRS.

The interim condensed financial statements contained in this report are not audited and do not constitute statutory accounts within the meaning of Companies (Jersey) Law 1991. The Annual Report and Accounts for the year ended 29 February 2016 have been filed with the Jersey Companies Registry. The auditors' reports on those accounts was unqualified, did not include reference to any matters on which the auditors were required to report by exception under Companies (Jersey) Law 1991.

The group's business activities together with the factors that are likely to affect its future developments, performance and position are set out in the Business and Financial Reviews. The Financial Review describes the group's financial position, cash flows and bank facilities.

The interim financial statements are unaudited and were approved by the board of directors on 26 September 2016.

Going concern

The interim financial statements have been approved on the assumption that the group remains a going concern. The following paragraph summarises the issues and basis on which the directors have reached their conclusion.

The directors have reviewed the group's cash flow forecasts for a period exceeding 12 months from the date of authorisation of these interim financial statements. Following this review, the directors have formed a judgement that, at the time of approval of the interim financial statements, the group has sufficient resources to continue operating for the foreseeable future including the funding of necessary capital expenditure. For the reasons noted above, the directors continue to prepare the financial statements on a going concern basis.

Accounting policies

The interim financial statements have been prepared in accordance with the accounting policies set out in the group's Annual Report and Accounts for the year ended 29 February 2016.

2              Principal risks and uncertainties

The board considers the principal risks and uncertainties which could impact the group over the remaining six months of the financial year to 28 February 2017 to be unchanged from those set out in the group's Annual Report and Accounts for the year ended 29 February 2016, which in summary are: competition risk; fashion and consumer demands risk; systems and technical risk; supply chain risk; loss of key facilities; people risk; customer dissatisfaction; and financial risk. These are set out in detail on pages 19 to 21 of the group's Annual Report and Accounts for the year ended 29 February 2016, a copy of which is available on the group's website, www.boohooplc.com.

3              Segmental analysis

4              Other income

5              Profit before tax

Profit before tax is stated after charging:

6             Earnings per share

Basic earnings per share is calculated by dividing profit after tax by the weighted average number of shares in issue during the year. Own shares held by the Employee Benefit Trusts are eliminated from the weighted average number of shares. Diluted earnings per share is calculated by dividing the profit after tax by the weighted average number of shares in issue during the year, adjusted for potentially dilutive share options.

7              Deferred tax

8              Inventories

The value of inventories included within cost of sales for the period was £56,800,000 (2015: £36,300,000; 2016: £82,187,000). The impairment provision was increased by £50,000 to £605,000 (2015: reduction of £55,000; 2016: increase of £296,000) and charged to the statement of comprehensive income.
 

9              Trade and other receivables

10           Trade and other payables

11           Share capital

12           Related party transactions

There were no related party transactions during the six months to 31 August 2016 outside of the normal course of business.

13           Capital commitments

Capital expenditure contracted for at the period end but not incurred amounted to:

Appendix to interim announcement - prior period revenues by region

Revenue by period for the six months ended 31 August 2016

Revenue by period for the year to 29 February 2016

CER in this appendix for the year ended 29 February 2016 is calculated using exchange rates prevailing during the year ending 29 February 2016.

Nomenclature: ROE - rest of Europe; ROW - rest of world; yoy - year-on-year; CER - constant exchange rate

PRESS RELEASE

This announcement contains inside information.

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.

PRESENTATION

Certain statements included or incorporate by reference within this presentation may constitute "forward-looking statements" in respect of the Group's operations, performance, prospects and/or financial condition.

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 presentation should be construed as a profit forecast.

This presentation 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 and 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 presentation reflect the knowledge and information available at the time of its preparation. Liability arising from anything in this presentation shall be governed by English Law. Nothing in this presentation shall exclude any liability under applicable laws that cannot be excluded in accordance with such laws.