boohoo group plc (DEBS) Earnings Call Transcript & Summary

Hello, and welcome to boohoo group plc Trading Update Call. [Operator Instructions] And just to remind you that this conference call is being recorded. Today, I'm pleased to present John Lyttle, CEO. Please go ahead with your meeting.

Good morning, everyone. Thank you for joining us this morning for our Q1 trading update call. I'm John Lyttle, Group CEO of the boohoo group, and I'm joined this morning by Mahmud Kamani, our Executive Chairman; Carol Kane, our Group Co-Founder and Executive Director; and Neil Catto, our Group CFO. I'm going to take you through our Q1 trading update, which we released this morning, alongside an update on our Agenda for Change progress. We will then open up the line for any questions. So on to the results for the period. We are delighted with the strong performance this quarter. Revenues totaled GBP 486 million, up 32% year-on-year. Our brands continue to grow strongly, and we are encouraged by the early performance following the relaunch of our new brands. It's been an impressive quarter versus strong comparatives, stores reopening as lockdowns ease and continued market uncertainty. It's a particularly strong performance against a very strong Q1 last year, with the group delivering 91% growth over the last 2 years, which is a phenomenal achievement and, in our view, further demonstrates that the channel shift online from the pandemic is here to stay. In the U.K., sales growth has accelerated, up 50% compared to last year and 95% over the last 2 years, with over GBP 0.25 billion of revenues in the quarter. The U.S. continues to perform strongly, up 43% year-on-year against a strong comparative period last year. The U.S. remains a key international focus market for the group. And we're delighted to have delivered sales growth of 157% over the last 2 years. And across the U.K. and U.S., the group has more than doubled in the last 2 years. Sales were down year-on-year in Europe and the rest of the world, which is in line with our expectations. We saw strong growth in Europe at the start of the pandemic during Q1 last year when we grew 66%, but this market has been more challenging and uncertain during this quarter with markets in Europe experiencing a more delayed reopening compared to the U.K. and U.S. For the rest of the world, growth has slowed in recent quarters, which we believe is impacted by service disruption from the pandemic. Gross margin was 55%, down 60 basis points year-on-year due to the exceptional level of full-price sales that we achieved last year. It is, however, flat on a 2-year view, which highlights the resilience of our trading performance when compared to more normal times. We closed the quarter with a strong cash position of GBP 199 million, with significant investments in the quarter in our infrastructure and operations as well as new office premises in London, as previously announced in April. Operationally, we continue to build for the future at pace. We are very pleased with the integration and relaunch of our newly acquired brands, Dorothy Perkins, Wallis and Burton. These brands will help underpin group's growth as they gather momentum and as we continue to build out the product ranges. In Debenhams, we're making excellent progress growing our fashion, beauty and homeware ranges. We have now launched beauty and just last week launched our first brand on the marketplace as we transform Debenhams into a digital department store. Our Wellingborough warehouse, which currently houses Karen Millen, Coast, Warehouse and Oasis, is now operational. And our Daventry warehouse, which will house some of our newest brands, is on track to go live in Q2. And for our London-based brands, we were delighted to secure a location for them all to operate from, and we have moved into a great new location in Soho that is now fully operational also. We have made further great progress on our sustainability journey in the quarter, where we published our UP.FRONT sustainability strategy back in March, alongside our U.K. supplier list. And we remain on track to publish our international supplier list in September. Since our full year results in May, I'm pleased to announce that we have joined the Fast Forwardinitiative, which will add greater oversight to our U.K. supply chain. And we will transition all U.K. orders to the Fast Forward initiative over the next 12 months. Sir Brian Leveson has also published this morning his third progress report on the group's Agenda for Change program, detailing the excellent progress that the group has made against the delivery of the recommendations made last summer. It highlights the determination of the group to develop and demonstrate a gold standard in relation to the supply chain and to all aspects of ethical, transparent and sustainable business practice. As part of our continued commitment to transparency, we have published a report this morning, and it's available to read in full on our website. And lastly, on outlook. We are feeling confident that with the strengths of our platform, great trading in our existing brands and successful integration and relaunch of our newest brands, we are on track to deliver another year of strong profitable growth, notwithstanding the significant investments that we have made as the group builds for the future. Group has made a strong start with its financial year against challenging comparatives. And in line with expectation, uncertainty remains in a number of markets that the group operates in around the world as a result of the pandemic. Guidance, therefore, remains unchanged from the group's last update in May 2021. As a reminder, revenue growth is expected to be around 25% for the current financial year, and we expect to report an adjusted EBITDA margin of 9.5% to 10% for the full year. Our medium-term guidance remains at 25% sales growth per annum with a 10% adjusted EBITDA margin, reflecting the Board's confidence in the group's prospects as it continues to build for the future. So in summary, it's been a great start to the year. We've continued to demonstrate strong growth against a strong comparative period, and the newly acquired brands have been relaunched successfully. We see more and more opportunities arising as markets reopen, and we are well positioned for the rest of the year and look forward to providing you all with further updates on our sustainability strategy in due course. And with that, thank you very much for dialing in. I would now like to open the line for questions.

[Operator Instructions] We have a question from the line of Alvira Rao from Barclays.

I've got 2 questions. The first is, can you talk a little bit about the KPIs driving growth in Q1 in terms of active customers, order frequency, average order value, et cetera? And then more specifically, in markets where you saw a year-over-year decline off a tough comp, can you help us understand the KPIs driving that as well?

Alvira, it's Neil here. So on the KPIs that are driving growth, it's -- you've obviously seen, overall, we've seen strong growth against those comps from last year. Last year, what we saw in Q1 was relatively high average order values, slightly flatter order frequency and increases in active customers, so new customers. And what we've seen in Q1 this year is still good levels of customer acquisition, slightly lower transaction values than we saw last year, but it has been mixed across the brands and -- but overall, that's what's happened. And then the order frequency is at slightly higher levels than Q1 last year. And then in the tougher markets, it's been similar trends, but with lower levels of customer acquisition and active customer growth. So that's what we've seen there. So that's consistent with what we're seeing, which is just really tough comps last year in Europe, in particular, where we saw a big surge early on in lockdown, and then it kind of tailed off gradually throughout the rest of the year. But Q1 and Q2, we have those really big comps in Europe.

Great. And just one follow-up, just on Europe, in particular. Obviously, lockdown has been slower to ease in those markets. Has that not had any benefit in terms of retail being closed?

I think retail has been open a little bit. I think the big factor has been lockdown, has been curfews, et cetera, and people just haven't had as much of a reason to go out and to travel. And those are some of the big rationale. Where we've seen positives, and I think this is true in Europe, that over the big events like Black Friday, going back to November, December, and then Easter was relatively strong in Q1. So that gives us some optimism and it indicates what we're saying that, look, I think people have just got a bit tired of buying lockdown clothes, not as many reasons to buy a new outfit to go out. And really, I think the opportunity is post -- as we leave the pandemic in the wake, then we see Europe as a massive opportunity.

Our next question comes from the line of Anne Critchlow from Societe Generale.

I've got 2 questions. Firstly, on the marketplace. Have you had any talks yet with potential fashion partners? And what sort of timing are you thinking about to really transform that into a fashion marketplace? And then secondly, at the full year results, you mentioned the very impressive sustainability commitment that you hoped 30% of all brands would have sustainable materials this time next year, I think. I'm just wondering, given the inflationary pressures in the supply chain, whether you can reach this ambition within your current margin guidance.

Yes. So John here. I'll take the sustainability one. So yes, we're still on target to achieve those mixes across all the brands for next year and, again, feeling very confident that we can achieve those with the current margin guidance. And then in terms of marketplace, yes, we're having lots of great conversations with key fashion players. And again, you'll be seeing the onboarding of some of those players over the coming months. And we're still in a build situation, as you can imagine, with the platform. We had our first couple of marketplace brands launched last week, and it builds by week and by month going forward, but some great conversations we're having at the moment.

Which of these fashion brands have you launched already?

I wouldn't comment on the fashion brands we're in discussions with, with regards to those. But some of the ones that we've launched with are previous Debenhams. So for example, Regatta would be one of the ones that we've done. Yes.

Our next question comes from the line of Charlie Muir-Sands from Exane BNP Paribas.

Sticking with Debenhams for a minute longer. I just wondered, could you talk about what you're experiencing with respect to things like site traffic since you -- compared to what the site was performing at, let's say, this time last year, are you still attracting as many consumers to debenhams.com as you previously were? Obviously, notwithstanding the fact that you haven't got the full range yet built out.

Like all of our previous acquisitions, it's -- when we launched the brand -- relaunched the brand, it's a soft launch. And obviously, it's about building product ranges before we really switch on marketing to an extent of driving that traffic. So we're at that early stage of building the website, onboarding more brands. You'll see, for example, beauty brands are onboarding on kind of a weekly basis now, but that takes time overall. But once we're in a good position there, at that stage, that we'll press the marketing button as such.

And the -- I think you guided for the full year, the M&A contribution at around about 5 points of the 25% growth you're aiming for. Firstly, is that still what you're expecting? And secondly, can you give us the number for Q1, please?

So yes, we guided a 25% growth and 5% of that contribution coming from Debenhams and the Dorothy Perkins, Wallis and Burton. So we're sticking with that guidance. And obviously, the run rate was slightly above back in Q1, and the outperformance was from both the established brands and the new brands were at that 5% level. I'm not going to say what it was because it was different every week, actually, mainly because of the variability on the growth from the more established brands just because of the different fluctuations, different patterns. So we're sticking with that as the guidance this year. There's a lot of uncertainty, not just around established brands, with pandemic and how that plays out over the next 9 months, but also the new brands and how much traction they get, how early. So all of those uncertainties, the safest assumption is that the guidance is the same as it was a few weeks ago when we first announced it. And I think everybody has felt that the outperformance would come from the new brands, but it's good to see in the first quarter that we've been a little bit above the run rate from the existing brands as well, particularly against the tough comps that they had from last year.

Great. And one final question, if I may. I just wondered if you could give us any color around the trends over the quarter. I know that last year you obviously experienced quite a lot of volatility with weakness at the start of the pandemic, lockdown and then very strong, particularly towards the end of May. But perhaps with reference to 2019 levels, is the exit rate broadly consistent with the 2-year stack? Or how should we be thinking about the trend as we move into Q2?

It's been broadly that. But what you saw last year was a massive ramp-up in April and May and with the highest growth rate being in May. So you've got that to anniversary. So you've got the -- almost the inverse pattern within that. So it has been quite variable if you think about it. In the U.K., you have lockdown restrictions being fed through the quarter from the beginning of it really and in April. And then -- but last year, it was the other way around where you went into the hard lockdown halfway through March. And you saw really last year the pattern was a big surge in Europe and then -- and that's where we've been locking those 6 months in Europe. Whereas in the U.K., actually, it was a bit more of a modest bounce from when we first went into lockdown and then quite consistent growth rate through the year. Whereas in Europe, they tailed off. And then U.S., it was almost in between those different phase, so a pretty strong surge initially in lockdown and then a bit of moderation, but not much. So it's really hard to say what's going to be happening with the different patterns of what then. I think what we -- I think there's a lot of optimism is what we've got in the U.K., great portfolio of brands that are all doing well. And that's what we want to see in all of the international markets. I think the multi-brand strategy is being indicated and are working really well.

Our next question comes from the line of John Stevenson from Peel Hunt.

A couple of questions as well, please. So first off, can you talk around how the shopping trends themselves have sort of shifted with lockdown restrictions have eased, particularly in terms of the product mix and brand performance, pretty much over quarter? Then second question, just picking up on the Debenhams point and the 5% figure that you're running ahead of. I mean, how are the stars aren't building on the sort of latest batch of acquisitions? Because I would imagine this sort of very much second half-weighted. So to be already kind of running ahead of that initial guidance more surely but quite well.

So in terms of if I take the shopping trends first, yes, look, we've seen a change. We've obviously been coming into summer as well. You can imagine in the last couple of weeks we've had great weather in the U.K. So that kind of flipped into dresses, as an example, away from the dominance, I would say, of athleisure has been quite strong. We've seen dress categories as a mix, for example, actually raise above pre-COVID levels in the last couple of weeks. That bodes really well for going forward and how people are shopping when you're coming out of lockdown, but equally, kind of addressing the weather as well. So we've seen some of this last year, I would say, in the summer of last year, but it's certainly much stronger at the moment in terms of that trend in the summer product. Obviously, people are still unsure maybe a little bit more sure in Europe about holidays, but still in the U.K. it's still uncertain, the pace has been able to take a holiday and travel. So we'll need to see how categories like swimwear, et cetera, play over the summer months. But it's definitely changing. A lot of it driven by weather. And then hopefully, if we get to middle of July and, again, particularly in the U.K., if kind of clubs reopen, and it's not sort of tables of 6 in a bar, then I think you'll probably see that kind of going out really kind of driving even stronger.

And on the new brands or new acquisitions results, so when I was saying that the overperformance on the 5%, that wasn't really from Debenhams because Debenhams was literally only launched April 12. So the more the performance -- outperformance from the acquisitions has come from Dorothy Perkins, Wallis and Burton. And what happened there was that we've been -- we re-platformed those brands onto our tech stack in halfway through the quarter. And we've also been selling the inventory that we acquired as part of the acquisition. So we've replatformed and then we will be moving more towards full-price sales through the rest of the year. And that's the uncertainty around how much traction we're going to get with that. So that's where it could come back. And at the same time, we've seen the growth on the existing brand will be slower than it was. And therefore, that could be where in the mix of things the new brands may not contribute as much.

Okay. But it's going to be so well -- to be so well in the first quarter where you're not expecting to have sort of the full beauty offer and third-party brands that are all signing before -- just before peak so like a pretty good start.

I think we're pleased with the way it's gone. And we're starting from basically scratch, and we're building up the proposition, onboarding brands in beauty and the clothing marketplace brand. So it's extremely early days for Debenhams.

Fantastic. And just a final comment well on -- just in terms of the returns percentage. I know you can put a number on how it shifted as the sort of product mix has gone a little bit more normalized.

So the return -- exactly, as we spoke about at the full year update, that we were expecting returns rates to move back towards more normal levels, but it would be a function of the product mix. We're starting to see that, but the returns rate isn't back at normal levels yet because the product mix isn't back at normal levels. But having said that, you've seen some great performances in dresses in just the most recent weeks. So that will push up the returns rate a little bit. So exactly as we'd explained that we were expecting returns rates to move up and the distribution costs to remain elevated, that's basically playing out as we'd expected.

[Operator Instructions] We have a question from the line of Michael Benedict from Berenberg. .

Just one from me. You ended the quarter in a strong net cash position, clearly. I wondered if you're in a position to think about deploying back cash on any further of M&A activity? Or do you feel like you've got, I guess, enough on your plate as things stand?

Obviously, we're integrating the recently acquired brands. Neil had just spoken about them. They're still at a very early part of their journey. But we did raise money last year with a view through acquisitions. So we're always looking at, what I would say, for opportunities, not just in the U.K., but equally in Europe and in the U.S.

Our next question comes from the line of Simon Bowler from Numis.

Three quick ones, if it's okay. Firstly, were there any kind of notable differences in trends between the more established brands, PrettyLittleThing? Secondly, you mentioned Rest of World was impacted by -- you suspect impacted by the service proposition. Can you just kind of flesh out what's changed? And have there been any other changes to your propositions in the U.S. or EU? And then finally, the stock that was acquired with the Topshop brands, how far through that are you now? Is that kind of largely complete and you've got sort of inventory file that you're targeting?

So on the differences between boohoo and PLT, we've actually shown similar trends. So we have got the luxury of being able to see lots of different brands in lots of different markets. And we have seen just similar patterns across all of the brands. And therefore, it feels like -- that's why we think it's more around lockdown patterns, what's happening. And so the trends have actually been very similar with boohoo and PLT. And although they've got slightly different concentrations in different markets, for example, boohoo has got higher concentration in Europe than PLT, but they've both seen very similar trends. The Rest of the World, I think, has been -- it has been impacted by service proposition. I think it probably has. The cost of distribution to Australia and New Zealand are much higher. And lead times have not got shorter, and they're probably a little bit longer, as you can imagine. But if anything, it probably improved a little bit since their lowest point last year. But it's difficult to say, again, even with those anticipated markets, it's more around what's been happening in lockdown, what people are buying, et cetera. And then on the inventory side, on the ex-Arcadia brands, we've made a lot of progress clearing the inventory. And you can imagine, it wasn't that relevant for spring/summer. So there's a much higher mix now at the spring/summer stocks, although some of the inventory that we acquired was on the water, and it was very relevant. But we've made good progress clearing through that.

Our next question comes from the line of Georgina Johanan from JPMorgan.

It was really just going back, I guess, to kind of the European performance and just any more color that you could give on that. And particularly, I mean, do you think your -- I guess, clearly, you're losing share in the online market there at the moment. I suppose the question would be, do you think you're losing share in sort of the subsegment in which you play? And also really just trying to understand the disconnect between players like Zalando who are still growing strongly online in that market. Do you think you effectively kind of took more than your fair share in July at the start of the crisis and what you're saying is you're giving that -- some of that back now? And it's normalizing? Or is competitive pressure actually ramping up? Or was perhaps the range not quite right or something? Just any more color would be really helpful. And I guess following on from that, could you share any comments on how the cohort that you acquired in Europe at the start of the crisis is performing now, please?

So really, I think it's more the latter of what you were talking about, but we did get a -- maybe a bit more than our fair share in Q1 and the start Q2 last year. But because we kept our services going very well, but we didn't see any kind of impact initially in lockdown, whereas others did. But then they came back very strongly. I think that's the phenomenon that you've got there. But we're obviously still gaining market share there. So some of the market stats we're seeing for the European markets are down quite heavily overall for clothing and fashion. So we're nearly 50% bigger than we were pre pandemic, so we are taking share and -- but having said that, we're so small in most of the European markets. I think it's -- we would expect to be taking significant share. And we want to take more market share than we have done compared to last quarter, last year. But we're 50% bigger than we were pre pandemic. And a lot of omnichannel retail or brands are pleased simply getting back to pre-pandemic levels, even when they've had a bit of a reopening boost. So the online pure plays are taking share, and some of the numbers that we're seeing from the pure plays are extremely strong. But if you compare them to us, our numbers were stronger earlier on, and then they accelerated later and perhaps more steadily. So I think you've got all of that. We definitely know we're in the right place. We're online -- an online pure play. I think everything we've seen means the online businesses can be more flexible, and that's where the future is. And so I think that's what you've got there, but extremely big comps in Q1 last year. And then we're really waiting for people to get back to more normal and have reasons to buy outfits. And I think that's coming later for Europe.

And perhaps just a brief follow-on, if I may. You mentioned that negative performance was in line with your expectations, I think referring to both Rest of World and rest of Europe. I mean, should we be expecting Rest of World, in particular, to remain sort of negative through the balance of the year where the service propositions still impacted? Just any help on that would be great.

I think it's difficult to give much help there really because it's just so much uncertainty as to what is going to happen with lockdown and traveling as well. So those are the big uncertainties. I think we've maintained our guidance at the same level as we did a few weeks ago. And that was based on an uncertain situation. If anything, the fact that there is a lot of uncertainty in the market has been indicated. You saw that last night that we've had a postponement of restrictions being lifted in the U.K. Hopefully, we'll start moving through that. If you look at our comps, Q2 is going to be tough comps again as for Q1. And then we would look at them as getting a bit easier later in the year once you get towards peak and the party season and autumn/winter. But -- and it's anybody's guesses whether that is going to be the case. I think we're all very hopeful that there'll be Christmas parties and the like. It will be a lot more normal through the winter, which I think bodes well. But who knows?

Our next question comes from the line of Wayne Brown from Liberum.

Can you just give us some sort of a view as to how the mix between -- or your traffic between paid and organic and what the retention rates have looked like in the last quarter?

So generally, I think, there's been a trend over the last 5 years that paid social has become more and more important. And therefore, you've seen a reduction in the mix of organic traffic in favor of social media. Also paid search has made quite a good comeback as a really effective marketing channel. So we never give that breakdown of split. But for us, what I would say is that we've always had that headroom in our marketing plans to be able to cover all of the channels. And that's above the line. Above the line marketing is still very important to us, but so is the paid channel, the paid search and paid social in particular. So you've seen a little bit of a reduction in the organic mix, but I think that's an industry-wide trend over the last 5 years with the rise of Instagram and the continued importance of social media. So the retention over the last few months has been good. What we've seen is that, if you compare to last year, last year, we saw very much huge increases in traffic and huge decreases in conversion rates. And we've seen that invert again because we're in an inverted situation with regard to lockdown.

Okay. And then sorry, last one. Any material change or noticeable change in the mix of revenue coming from new versus repeat?

No. That's been quite consistent. But again, compared to last year, we probably -- we had a big boost in new customers through April, May and into June. And so that change has been year-on-year, you could see it, but actually, it's been quite consistent through the last 9 months, the mix of new and repeating customers.

Our next question comes from the line of Ben Hunt from Investec.

Probably have to wait until the interims to get the answer to this. But your cash generation from an underlying perspective, it's pretty strong in February. Is there anything occurring from a working capital perspective? Or is it just actually very profitable sales in this period?

No, nothing from a change in any working capital cycles. So we've had the normal good cash generation. And then we've had large amounts of capital expenditure on the London office and then the distribution centers. So exactly as we indicated at the last update.

Okay. And then was there any discernible trends would be how you deployed your marketing in the period? Because I mean softer in Europe and Rest of the World, but U.K. was very strong. And I guess linked to that in Wayne's previous question, has there been any change in the actual customer acquisition costs that you're seeing at the moment?

Customer acquisition costs are higher, again, as we've indicated that we've been -- if you go back to first quarter last year, we pulled back on our marketing costs. And then the traffic came more naturally and actually less expensively in lockdown. And then things have generally got more competitive. But for us, we've been wanting to build the awareness of the brand, so we've continued to do that even in sort of fairly difficult markets in a way. So customer acquisition costs have generally come up a little bit and that's what we're seeing. But we're investing in new brands. And for the existing brands, we've still kept awareness building going. So we're optimistic that that's going to stand us in good stead as the lockdown restrictions get eased.

Okay. And no discernible differences between the geographies and how you deployed the marketing?

We've had a good -- you answer it. Carol can.

Yes. I'll jump in there. It's very different for each brand. So it's very hard to generalize on where mixes are in territories because we have established brands which have larger international presence, have different brand digital marketing spend as well. And then, obviously, all the new brands are all on the start of their brand awareness journey. So they have a high percentage of brand awareness spend, unless digital, where our established brands are having more digital spend currently because that's really as a result of COVID because we haven't been able to get out into market and do the brand awareness piece that we would normally do from a PR facing or collaboration and events and that type of thing. So the brand mix has very much been tailored and a lot this year, one for new brand and for established brands just because of COVID and things we've been unable to execute due to the restrictions. So we slipped into more digital. But coming this summer when things are opened up, that's about to change again. There's going to be a little bit more brand awareness activity start. And certainly, with Love Island, I would say, in the U.K. is a good example this coming summer.

You'll see a lot more of us stay in the tube if you've been there recently as well. So that we haven't been in the last year.

Yes. That's right, John. We're back on the underground.

Our next question comes from the line of Anubhav Malhotra from Liberum.

I just had a couple of questions. Firstly, on the Rest of World performance, if you could provide any details on which particular geographies we're doing better or which are worse compared to the average of the Rest of World division? And then on -- as Carol just mentioned, the brand mix -- the marketing mix is quite different by brand. So maybe could you give us an idea of some of your new brands are at a much higher price point like Karen Millen? How does the marketing mix for them differ than the overall group averages generally towards the lower price point?

So on the Rest of the World, the main markets for there are the markets, Australia, New Zealand. And we've seen similar trends there. That -- it's just a bit softer for us and -- but we're still at those similar levels that we were a couple of years ago and -- but not massively key markets for us now. And the growth is going to come from the regions. But there's markets in the Rest of the World that have huge opportunities for the future as well, but we're not even starting to tackle those. And on the kind of customer acquisition, marketing cost for the higher price point brands, I think we've been -- even for Karen Millen, it's quite early days yet because we bought them in October, and then we went into the pandemic in March last year. So what we've been is very encouraged by the fact that we thought it would be more expensive to acquire Karen Millen customers than it has been. So that's promising. But we still want to be able to really, really grow Karen Millen and the other higher price point brands. And I think once we get to more normal markets, we'll be able to see some fairly rich themes in terms of number of customers. And it will be great if we can keep the customer acquisition costs where they currently are. But I think with bigger campaigns, they'll probably initially get a little bit more expensive to acquire those customers. And then -- but overall we're quite encouraged with the way those higher price point brands have gone and I think indicates our theories that the online model works not just at the younger end of the market with lower price points, but it's a big opportunity in the rest of the market as well.

I'll just add on to that. The major -- there's very much -- the thought process of how you market to different brands, it's very much the mix terribly different depending on what stage they're at. However, when you look at a Karen Millen and you collaborate with, so just to give an example, we've done several cooperations with an influencer called Lydia Millen. She wouldn't be an appropriate influencer for as she is on a PLT or boohoo, but she's very appropriate for Karen Millen brand. And similarly, something like a brand like Oasis was just done a collaboration with BRHS on botanical prints because that fits that brand. So really, the mixes and acquisition costs, as Neil said, aren't terribly different, but the method of getting those -- that traffic and who you collaborate with is where the creative know-how comes in.

Our final question comes from the line of [ Eleonora Darin ] from Shore Capital.

Two for me. The first is, are you seeing any shipping related concentration when sourcing from the Far East? And secondly, how are Debenhams suppliers reacting to ESG concerns? Do they appear satisfied with the work you are undertaking?

So with regards to the Debenhams suppliers and ESG, we're having some conversations, but minimal is the way I would describe it. If, for example, I look at the -- most of the suppliers, for example, the brands who are on the marketplace, about 40 of those brands were doing about 9% of the business, and they've all signed up as an example to come back on board. So that will give you a view with regards to where they are there. And then in terms of shipping, like most businesses around the world, whether it's air freight, whether it's sea freight, particularly airfreight, it's limited. And obviously, it's more expensive, as Neil has described earlier. But we're moving our goods from every country that we source in around the world, and we're getting our goods in. There's probably a little bit of a lag on lead time, probably up to a week on average, I would say. And that's really about congestion getting into airports or ports. But principally, we're not having any issue moving our goods from any of our key sourcing countries.

There are no further question at this time. Please go ahead, speakers.

Okay. So thanks, everybody, very much for joining us this morning. Another stunning quarter delivered from the boohoo group, and we look forward to catching up with you all again in September. Thanks. Bye.

This now concludes our conference call. Thank you all very much for attending. You may now disconnect your lines.