For IMMEDIATE release                                                                                                                                     13 November 2024

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

("boohoo" or "the Group")

Results for the 6 months ended 31 August 2024

Interim and post-period highlights

·    Ongoing review to unlock and maximise value for all shareholders, assessing the Group's corporate structure

·    Group GMV trend continues to improve, EBITDA impacted by investment in brands

o Significant growth in Debenhams Marketplace with over 170% GMV pre returns growth and c.10,000 brands on board, achieving target for 2024

o Karen Millen YOY GMV pre returns growth and opportunities to expand into licensing and 3^rd party arrangements

o Performance in Youth Brands impacted by the external environment, including weak consumer activity, down 16% GMV pre returns

·    Decisive action to close US distribution centre to focus on profitability. 1H FY25 EBITDA Margin impact of 120bps, closure will bring second half 2H FY25 savings

·    Continued cost reduction, operating costs down £128m vs 1H FY23, ahead of target

·    New £222m debt refinancing secured with its existing lenders

·    Dan Finley appointed as CEO

·    Capital markets day planned for Q1 2025

Dan Finley, Chief Executive Officer, commented:

"I believe that the Group remains fundamentally undervalued. We have a significant opportunity to create substantial value for all shareholders through our 5 core brands.

"I've been with the Group for nearly three years, joining as CEO of Debenhams in January 2022 transforming it into a highly profitable, capital light marketplace business. I'm excited at the opportunities I see ahead for the entire Group. We have brilliant brands and great people, underpinned by best-in-class infrastructure. We have had huge success with Debenhams, and I look forward to extending that across the entire Group.

"Last month we announced a business review to unlock and maximise shareholder value. I am leading this review and will update shareholders in due course.

"The first half of FY25 has seen positives. We continue to see significant growth in Debenhams Marketplace and Beauty with YOY GMV growth of more than 170% and more than c.10,000 brands on-boarded, already achieving our target for the end of 2024.

"The Group has also reinvigorated and transformed Karen Millen into a digital first, premium global brand which has delivered positive GMV growth in 1H FY25 in a challenging market. The future growth potential is significant through maximising international, licensing, and franchising opportunities and adoption of the marketplace strategy.

"There have been challenges and we continue to operate within a volatile market. Our Youth Brands have seen a GMV pre returns sales decline. These brands do still have significant scale, a loyal customer base, serving more than 14 million combined active customers with GMV more than £1.8bn in FY24 and are supported by our state-of-the-art automated infrastructure. We continue to be cost focused and have taken actions to improve profitability in our Youth Brands such as closing the US distribution centre.

"As we look forward, I am excited for this next chapter and to deliver on our shared objective to unlock and maximise value for all shareholders. Today we are also announcing that we will host a capital markets day, which will take place in Q1 2025."

Unlocking shareholder value

Further to the announcement on 18 October 2024, there is an ongoing review of various options to unlock and maximise value for all shareholders. The Board believes that the Group remains fundamentally undervalued following the developments of recent years, which have created a business with five core brands underpinned by best-in-class infrastructure, addressing a diverse global customer base:

·    Debenhams: Debenhams has been repositioned as a leading British online department store. It is fast growing and profitable, with a capital-light and highly cash generative model with significant brand awareness in the UK, c.5 million active customers and c.10,000 brands across fashion, beauty and home. During 1H FY25 it saw significant growth in both its External Marketplace and Beauty offerings.

·    Youth Brands: The Group has three online retail brands with strong brand identity and significant scale PrettyLittleThing, boohoo and boohooMAN. Collectively they serve more than 14 million customers with GMV more than £1.8bn in FY24 and are backed by state of the art fully automated distribution centres. The brands also enjoy an impressive social media presence with over 48 million followers across all platforms.

·    Karen Millen: The Group has transformed Karen Millen into a digital first, premium global brand. The future growth potential is significant through maximising international, licensing, and franchising opportunities and adoption of the marketplace strategy.

·    Infrastructure: The Group has invested in state-of-the-art automated infrastructure. The Sheffield site has had c.£125m capex invested and is delivering significant cost savings, headcount reductions and increased pick rates of around 10x.

The Group also continues to review options for its non-core, non-strategic assets, including the Soho Property.

Summary of HY25 performance

Financial & Operational highlights

·    GMV pre returns down 7.3% vs 1H FY24 to £1,176.9 million.

o Debenhams is made up of the online department store including Marketplace, Beauty and, reported separately, sales of our own Labels. Debenhams Marketplace and Beauty saw significant growth of 170% 1H FY25 compared to 1H FY24. The Debenhams marketplace now has c.10,000 brands, already achieving its target set for 2024. The expansion of our beauty offering in the year puts us in a solid position ahead of the Black Friday and Christmas trading period.

o Karen Millen, which has been transformed into a digital first, premium brand saw GMV pre returns increase by 2.3% to £78.3 million.

o Youth Brands saw a GMV pre returns decrease of 15.9% YOY to £833.1 million, reflecting difficult market conditions, impacted by weak consumer environment.

o GMV pre returns declined in our Labels⁽⁸⁾ by 36.5% to £86.5 million. We have seen improvement in the trend of our Labels throughout the year as we manage them profitability and pivot them to our marketplace model.

·    GMV post returns down 6.2% vs 1H FY24 to £807.8 million. Positive trend in GMV post returns performance has been maintained with decline slowing from (16%) in 1H FY24 to (10%) in 2H FY24 and (6%) in 1H FY25.

·    Revenue of £619.8 million, down 15% vs 1H FY24 reflecting difficult market conditions. Revenue growth was also impacted by the continued growth of marketplace with its commission-only revenue model.

·    Gross margin was 50.7%, down 270bps vs 1H FY24, reflecting the industry wide increase in return rates, inventory management actions including increased promotion activity and weak consumer demand. In response to the increase in return rates the group has focussed on improving supplier quality and removing unprofitable, significantly high returning customers.

·    Operating costs of £294.3 million were down 18% vs 1H FY24 driven by the actions taken under the ongoing cost saving programme.

·    During 1H FY25 the decision was taken to close the US distribution centre and fulfil all US orders from our state-of-the-art automated UK distribution centre in Sheffield. The US distribution centre had a negative impact on EBITDA of 120bps in 1H FY25. EBITDA benefits of the warehouse closure are expected during the second half of 2H FY25.

·    Operating costs are down by £128m vs 1H FY23, ahead of target, showing the impact of our cost saving programme and our continued focus on costs.

·    Adjusted EBITDA margin was 3.4%, down 90bps vs 1H FY24, due to reduction in Gross Margin, offset by cost reduction initiatives and value unlocked from automation investment. Adjusted EBITDA was £20.8 million, down 34% vs 1H FY24.

·    Inventory has been tightly managed throughout the period reduced by £38.1 million (18%) to £170 million in 1H FY25. Approximately, the Youth Brands hold 75-80% of the Groups inventory, Karen Millen 5-10% and the Debenhams Group the remainder.

·    Capital expenditure of £14.9 million has reduced from £36.3 million in the first half of the prior period and represents strategic investments in systems and infrastructure. The reduction in capital expenditure is expected to continue with the investment cycle now complete following the significant investment to deliver best in class operations.

·    Net debt increased to £143.1 million (Feb-24: £95 million net debt), with total liquidity of £131.9 million. On 18 October 2024 the group successfully signed a new £222m debt financing agreement.

Outlook and Guidance

FY25 Outlook:

·    In the second half of FY25, the Group expects a higher GMV and a stronger adjusted EBITDA performance, when compared to H1 25, despite further investment into the brands to unlock shareholder value

·    Strong continued Marketplace growth

·    Ongoing headwinds in Youth Brands

·    Benefits from historic cost actions to reduce cost base year on year

·    Significantly reduced capex vs prior periods

·    Capital markets day planned for Q1 2025

Medium Term Guidance:

·    Debenhams: target +£1.5bn GMV pre returns with double digit EBITDA margin

·    Youth Brands: +£1.8bn GMV pre returns combined today. 6-8% EBITDA margin target

·    Karen Millen: premium, high margin brand. Double digit EBITDA margin target

Investor and analyst meeting

A live webcast of the presentation including Q&A will be held on 14^th November at 9:30 am for investors and analysts and will be available via our website at www.boohooplc.com or on https://brrmedia.news/BOO_IR_24. This will be available for playback after the event.

About boohoo group plc

Founded in Manchester in 2006, boohoo Group is a fashion forward, inclusive and innovative business. The Group's brands are complementary, vibrant and scalable, delivering inspirational, on-trend fashion to our customers 24/7. The diversity of our brands, including the group's 5 core brands, boohoo, boohooMAN, PrettyLittleThing, Karen Millen and Debenhams, enable us to serve a broad customer base, globally. Since its acquisition in 2021, Debenhams has been transformed from a retailer into a digital marketplace with a capital-light, low-risk operating model and a focus on fashion, beauty as well as home. Boohoo Group is concentrated on driving sustainable, profitable growth with technology and automation increasing efficiency across the business.

Cautionary Statement

The person responsible for arranging the release of this announcement on behalf of the Company is Stephen Morana, Chief Financial Officer.

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 "aims", "anticipates", "believes", "continues", "could", "due", "estimates", "expects", "goal", "intends", "may", "objectives", "outlook", "plans", "potential", "probably", "project", "seeks", "should", "targets", or "will" or, in each case, their negative or other variations or comparable terminology.

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. Except as required by applicable law or regulation, 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 authorised under the Financial Services and Markets Act 2000 (as amended). 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.