Huddled Group Plc (HUD.L) Earnings Call Transcript & Summary

Good morning, and welcome to the Huddled Group plc Half Results Investor Presentation. [Operator Instructions] sir. Before we begin, I would like to submit the following poll. And I would now like to hand you over to Executive Chairman, Martin Higginson. Good morning to you. _

Good morning. Thanks very much everybody for attending. Before I get started, I'd just like to introduce that Dan Wortley, Group Finance Director and also Mike Ashley, Group CEO. And I'd just like to sort of frame this presentation. One of the reasons we asked Mike to step up and take on the role of group CEO was really to help us look at predominantly Discount Dragon. We felt Discount Dragon. It's a very, very complicated business. We were seeing great growth and have been seeing great growth in the business, but we really wanted to examine how can we make this business better. On the other hand, Nutricircle has been an absolute sort of star of the show, but it was going to Mike's depth of retail knowledge into the sort of Discount Dragon piece and to allow us to understand our business. We've made some significant changes within the team. And I really feel that we're now on the right track and where we want to go. So if we just flip to the next slide, please. So just sort of reading through the numbers and the sort of H1 highlights. Revenue up sort of GBP 4.23 million on the same period last year, 81% increase which I think is show that we're moving in the right direction. Discount Dragon orders up in the period, but we knew and we know that we want -- we review about business. We've done that now. We started to improve Basket Margin and more importantly, and move the business into of operational profitability. So it's all about key to orders now as we move forward. Nutricircle really has been the star of the show, absolutely making orders, up 768% and revenue up over 600% on the same period last year. So I think it really shows the potential of that brand as we move forward. Boop, and I think it's important to remember that a year ago, in September, this business started. So it was very, very much from flat in the beginning, and it delivered just over GBP 1.5 million in the first half of the year. In September last year, it did about GBP 40,000, just to put it into context. So I think a major sort of moving the right direction. And 4 million items saved from going into waste. It's important that we remember the Huddled is there as force for good. We stopped surplus items going to waste. In 2024, we saved 5.7 million items from going to waste. And in the first half of this year, we've saved over 4 million items from going to waste. So let's not forget that, as I said, we are a force for good and this is about stopping perfectly good products from going to waste. So if we just flip to the next slide, please, and I'll hand over to Dan Wortley to talk about the sort of H1 financials.

Yes. Thanks, Martin, and good morning, everyone. Thanks for joining us. Yes. So as you see the sort of headline in statement figures for the first half. We had Discount Dragon revenue came in just under GBP 5.4 million, which was a 10% increase on the same period last year. We had a gross profit of GBP 59,000, which is an improvement on what was a gross loss of GBP 106,000 in the same period last year. And all of the gross profit loss figures are stated after the full expense of marketing and warehousing costs. And Discount Dragon made an adjusted EBITDA loss of GBP 454,000. And again, that's an improvement on the prior year GBP [ 1,731,000 ] and I think you've seen that you've read this morning announcement both Discount Dragon and Nutricircle are now sort of profitable at this level, have been in August and September. So there's an improvement in the second half and then Discount Dragon loss after tax after depreciation, amortization and one-off cost of GBP 782,000. Nutricircle, as Martin said, as really growing significantly. Revenue of GBP 2.5 million, it's an increase of 621% since on the prior period from when it was acquired in April 2024. We've got a gross profit of GBP $205,000 and that's up from GBP [ 53,000 ] last year. Adjusted EBITDA loss of GBP 73,000 really given that down to sort of an increased overhead as we've built the business up to grow it -- growing into to these overheads, as I say that's now profitable at the adjusted EBITDA level and a loss before tax of GBP [ 114,000 ]. Then there's no comparative figures of last year's revenue, as Martin said, GBP 1.6 million. The business only relaunched under Huddled's umbrella in September last year. Business made a gross loss of GBP 74,000 and this is really down to high marketing spend because we're in the process of growing the database. So that's the reason for the growth loss and adjusted EBITDA loss GBP 398,000. And business is carrying sort of relatively high overheads at the moment, but we see it growing into those overheads, and we're sort of setting up the business for success, and we see a lot of potential in it. Head office costs of plc related items -- and then so just to sort of summarize on the group level, revenue just under GBP 9,500, (sic) [ 9.48 ] which is an increase of 81% from the prior year. Gross profit, GBP 190,000, which is up from a gross loss of GBP 53,000 last year. Adjusted EBITDA loss of just GBP 1.5 million, If we could move on to the next slide, please. Thank you. So just on the balance sheet, we've got -- we're seeing receivables of sort of GBP 160,000 of stock in transit. So the stock position is at the end of June, GBP 1.3 million. Cash, we have GBP 552,000 and that's before the GBP 1.5 million investment that came in July and August. And we've taken some borrowing opportunities that came available in the period. So we've sort of taken that on, which has been helpful and it's a good option for us to stock purchases and that sort of thing. That's the balance sheet. And next slide, please. Thank you. Just briefly on the cash flow. So we've had about GBP 1.4 million cash outflow in operating activities, working capital movements was as part of that positive about GBP 300,000 and a big element of that was to let's explore business [indiscernible]. So we sort of benefited from quite a bit of cash from that. Obviously, as we get into the second half, losses are narrowing that will put some far less pressure on this -- on the cash flow from that point of view. We have GBP 315,000 CapEx in the period, net CapEx, a relatively high CapEx period, actually, very high for us with warehouse -- works at the warehouse that will be going forward a bit far lighter as we move to THG. The CapEx will reduce significantly. So all in all, cash outflow was about GBP 1.1 million. But just to sort of to repeat what I said before that narrowing losses and the reduced CapEx will sort of help our position going forward. And I'll hand back to Martin, next slide, please.

Thanks, Dan. So let's just get into the sort of quarter 3 highlights. And as I mentioned before, Discount Dragon is a hugely complicated business. Getting the product mix right is really important and actually getting the sort of retail knowledge that I thought we needed was hugely important. I think you can see there in the first number, the 20% increase in basket margin is a real step change in the business. And just so people understand this, we talk a lot about average order value. Now average order value is important because ultimately, that helps drive basket margin. But it's about getting that consistency within the offering. And what we don't want to do is increase our average order value too much because if we go sort of to much beyond sort of GBP 50 mark, then that means that we have to send out 2 boxes, sending out 2 boxes we incur more postage costs and another box costs and more pick and pack. So it's really about finding the optimal sort of average order value, but then driving Basket Margin. So the improvement in basket margin has been a major step change in the business, and that's what led us to operational profitability in August, which is our sort of the toughest month of the year and again in September. And what we're starting to see now is consistency in the brand consistency in the offering which Mike will talk a little bit more about later on. Nutricircle, absolutely, the hero piece, revenue in the quarter, we're expecting this to exceed GBP 1.4 million. And just to put that into context, that's more than we did in the entire year last year, so we did more in a quarter than it did in the whole of 2024. So again, let's not forget the real star of the show here. AOV in Nutricircle of 19%. And again, back to that Basket Margin, which is so important, and it's important across all of our brands, up 23% in the period. And as we start to build out the sort of the offering in there and investing in other products, we currently believe that we'll further improve that Basket Margin. Booked orders. And again, it's really important that everybody remembers, this is effectively 1 year old. Now in September last year, we did just around 800 orders. At the moment, in September this year, we expect orders to be over 7000. So I think that shows the momentum of this business, that's got under its belt. It is a great, great business. There's sort of GBP 3.6 million of cosmetics go to waste each year. So a massive opportunity here, and I think we're well positioned as we start strengthening our product mix or we're positioned to take advantage of that. And during the period, we took a GBP 1.5 million investment into the business at no discount. We've got a major institutional or major institution on the share register, which I think for me was a big tick in the box, help strengthened our balance sheet. And more importantly, it gives us a runway and the confidence to move the business into sort of not only operational profitability but full profitability without having to come back to the market. So we are very, very positive. I think we made a lot of the right decisions and the right changes within the business. And I think we're now well poised to move on to the next stage of our journey. And the next slide, please. I'm going to hand over to Michael Ashley. Now he'll delve a little bit deeper into some of the things that he's done during this sort of short tenure that has really helped to sort of move the business on to the right track. So Michael?

Thanks, Martin, and good morning, everybody. So yes, I'll kick off with Discount Dragon. So I started at early July, having joined the business from my nonexec position. What I found was the following. We had a pretty inconsistent range proposition. That was a limited choice in the key categories of food cupboard, tea, coffee and household. We weren't really encouraging customers to get to that GBP 40 delivery threshold as well as we could. We were -- we had inconsistent margins, and that was probably from a not a disciplined approach on margin management. And that was due to an inexperienced category management within the team. So we focused on the following better product availability, really important that both our front and back baskets were consistent. And to do that, we had to widen the supply base, and we've been pretty successful at that in the quarter. We've offered greater choice on key brands in household, food cupboard, alcohol, tea and coffee. We've still got a long way to go, but that's been significant in our 20% growth in Basket Margin for Q2. We've had a very disciplined approach to what we call our front basket discounts. So our freebies, if you were to look on the website this morning, unless the team changed it, and we've given away 23 [indiscernible]. And we know the cost of that, obviously. We limit that level of discount on front margin. They're there to drive footfall to our website, the back basket, the width of choice on the category is very, very important. So we've got greater choice in food cupboard, household, tea and coffee, and what you'll also see is a balance of price points. That's also really important to get to an average order value of GBP 40. So it's just as important that we have -- we have really good value at GBP 10, GBP 5 to GBP 7.50. Ultimately, we've driven real consistency in the boxes going out to our customers. We averaged 9 to 10 items day in, day out, which is really helping to build that basket profitability. Next slide, please. So in terms of quarter 4 in Discount Dragon, our '25 focus is on the following. We've got 180,000 customers. It's important that we improve the frequency of the returning customers. It's important that our customer service through improves through delivery accuracy and speed. We are -- we will be able to offer next-day delivery with a late cutoff, which really brings us into today's expectation. It's really important that we target the different customer cohorts. We've got a brilliant CRM data analysis that we need to target those customers who buy only into certain categories. So when we're back in stock on coffee, it's really important they know straightaway. I think seeing Discount Dragon develop in building organic social marketing with core messaging around saving money and the planet. We are a force for good. We're stopping food going to landfill. And yet, we can offer great brands at really fantastic prices and again, maintaining that balanced price point. So we have to build the brand personality I think becoming famous for what's next in my Discount Dragon basket. And we have to continue to improve and reduce stock availability and range. We've got some fairly exciting conversations with big distributors within the U.K. food market. And we are building relationships also directly with the key brands and manufacturers. That's really important going forward to help our consistency of offer and of that choice on a daily basis. This is what will drive repeat customers. Next slide, please. Nutricircle. So as Martin already spoke to, this has been the jewel in the crown in the quarter. I think the improvements to the website and functionality has made it easier to shop. We've been successful in growing sales outside of protein bars, which have been pretty much our staple. We've improved the width of choice. It's now easier to get to the GBP 40 AOV. So that's driven fantastic results. So the average order value is up 19% for quarter 2, but it really impressively the team have delivered an improved Basket Margin of plus 23% versus Q2. So we successfully driven sales outside of protein bars into more healthy snacks and that really has driven strong repeat monthly customers and as we said, from 5,600 to 10,000 per month. This has given us a really good platform for growth in quarter 3. So next slide, please. So in terms of our quarter '25 focus, I think we've got to continue to improve and expand the product range. You've seen us adding more vitamins and supplements to really widen our reach into food nutrition and we will continue to increase the average order value in Basket Margin. We've built and enhanced the brand personality. We do need to become -- we need to build the awareness of the brand and what we do. We will benefit from the move to 3PL in terms of our delivery, accuracy and speed, and that will ultimately improve the customer experience. I think it's really important in Nutricircle that we now invest in this business to add new customers and because we see really strong return in customer data, which we hope to build on in Discount Dragon. We already have this in Nutricircle. So I think we can get to profitability quicker on Nutricircle. So that's the reason we will prioritize investment in Nutri in quarter 4 to our customers to our database. Thank you. Next slide, please. So Boop. Definitely, yes, a year of growth. The brand is only a year old. It is our most immature brand. And as a result, we have 50,000 customers as a base. We do have growing pains. We have to point out that we have an inconsistent range proposition. We are working hard to improve choice in the key categories of hair, skin care, lips, makeup and fragrance. At the minute, our supply base is too narrow. And therefore, we don't present the products we want to regularly enough. If you compare Boop to Nutricircle, Nutricircle benefits from being around 4 more years and having a customer database that is broader with deeper relationships with suppliers. This is where we need to get to on Boop. It's pretty much the same business model, our AOV aspirations are around GBP 40 per basket, but we need to give the choice in the categories in order to make sure that the customer has GBP 40 worth of products to spend every month. I think this brand now does have so much potential. It has very favorable product economics. If you compare to Discount Dragon, you can get to a GBP 40 delivery threshold, probably from 5 to 6 products. That's what we see at the moment. They tend to be small in cube. And therefore, from a delivery and supply chain perspective, this really does mean as a good profit opportunity. And when we get it right and when we do have good start, it lights up straight away. So for me, focus on Boop for quarter 4 is really building a consistent range proposition. So next slide, please. So we have to improve the stock position. And in order to do so, we've strengthened the team. We brought in expertise within the beauty market. And I think that's going to be critical to opening up new opportunities within the supply base. We will continue to increase the customer database. We're at 50,000. We've got to build that. But at the same time, through an improved proposition, we should be increasing the frequency of the returning customer. I think very, very important to expand and improve visibility on the social media channels. The beauty market is a wash with personality. And I think we have to basically play within this space. So for me, the hard yards are now on Boop. It really is about driving better availability to improve our proposition consistently and on a daily basis. Thank you. Next slide, please. So I'll now hand over to Martin, who will talk to you about our move to Ingenuity.

Thanks, Mike. So we've spoken a lot about wanting to improve our sort of fulfillment operation, wanting to get to the next day delivery, wanting to strive to be more of sort of an Amazon-type service. And we know this is really, really important to us and more importantly to our customers. It has taken longer than we would have hoped to move the fulfillment center. But just to put that into context, we've got to move over 40 articulated lorries. That's over 1,000 pallets and sort of 500,000 items, all of which need to be barcoded, need to be checked for their sort of volumetric sizing and need to be loaded into the Ingenuity platform. So it has been more complicated. It has been more challenging. But we are very, very much on track. And I think once we achieve this and we get there, then the customer experience will be night and day from where we are. Highly automated. And in driving that automation, it will eliminate picking errors. And we've spoken about a number of items in the basket. We've spoken about sort of complexities around things like Discount Dragon. And it's important that we get that accuracy. The less mistakes we make better our Trustpilot reviews, better on Trustpilot reviews and more likely and the more accurate we get our delivery, the more chances you've got actually coming back and buying again from us. Later deliveries, it is going to be really, really important. It's going to be important in groceries, equally as important to Nutricircle. But I think probably Boop Beauty is probably the one where, if you could order sort of midnight or even 1 A.M. for sort of same-day delivery then that's going to hit and resonate with the customers and certainly that audience of customers that wants products or want it tomorrow as I said in an Amazon type fashion. When we get better accuracy there will be less refunds, less refunds, less breakage, less sort of mistakes. So again, a big sort of tick in the box. Performing capacity is no longer an issue because we can operate 24 hours a day. It's fully robotic. There are no problems with capacity. And capacity is something that we sort of struggled with historically. We've hit 3,000 items and then all of a sudden, there is a delay in getting those out of the door because you just got humans involved. So the more we can remove that the better it is. But all of this is then based on sort of the core fundamentals of getting our product offering right, getting the product offering right, getting the margins right and then getting it to customers on time and accurately. So we're sort of a long way down the road. The team Paul Simpson heading that up is our Chief Operating Officer. Paul is not here today because he's busy working on the migration as we speak. And we will be running [ annual ] before Black Friday and ready to take orders from customers. Can we move to the next slide. And I just show a little video of the automated sort of service that we're moving to. So if we can just play the video, please. [Presentation]

Thank you very much. So you saw in that video some key words, which I think are really important retention, focus on customer service. And these are what going to be really, really important as we strive to improve our offering across all 3 brands. Next slide, please. So in summary, look, what we've got here is we know we've got demand for the product. We know we've got demand for value. Yes, we've got to get more things right. We've got to get Discount Dragon customers coming back. We've got a long, long way to improving the offering. We've strengthened the team. We can see that that's happening. We can see it happening in Nutricircle already. And as we broaden the offering, we'll improve the Basket Margin on that. And Boop Beauty is really sort of there. It's gone from 800 orders to 7,000 in order in a month. We're now about sort of getting the better product range and improving that. But demand for the product and demand for value has never been stronger than it is today. Next slide. So we've got to sort of -- Mike spoke earlier about the sort of tone of voice, and we've really got to strive and get over to people that we are a force for good that we are saving food from going to waste. I spoke earlier about the amount of products just in the cosmetics business that goes to waste, GBP 3.6 billion a year of cosmetics products are wasted, which shows the sort of scale of the opportunity. Next slide. And I think that really sort of underpins our sort of a force for good. So just flip to the next slide. So Discount Dragon work to be done, but we're making vast improvements, 20% increase in Basket Margin on the quarter. There's meant a meaningful step change. We moved into operational profitability in August. That's now continued into September. And with a level of consistency and a level of accuracy in our Basket Margin, we can see that continue when we grow from here on in. Next slide. Nutricircle, absolutely the hero of the quarter. Orders up massively over 700%, revenue 600% in the same period, delivered or will deliver about GBP 1.4 million of revenues in this quarter, more than in its entire year last year. So moving in the right direction. We will further strengthen and broaden our offering with Nutricircle over the coming months. We're going to do some big, big deals that will be announced and sort of strengthen that proposition. That will further improve the Basket Margin and continue this journey with solid operational profitability. Next slide. And Boop Beauty, focus on products. Our team is actually out in [ Cana ] as we speak and a big cosmetics conference. We know that they've already done a number of big deals there for us. So we're confident our product offering is going to improve. And as Mike said earlier, once we get the right products at the right price, this business absolutely lights up. And with the right products, we know we can take it in the right direction. And that will move into profitability in the sort of coming months. And all 3 of them will combine will help us to move into sort of group profitability within the resources and the balance that we've got. So strengthen the management team, solid balance sheet, great institutional investors. And I think now we've got a core proposition across all 3 brands that is delivering results, delivering operational profitability and marching us forward to group profitability. So thanks very much for listening. I really appreciate it, and we'll just open it up now to questions.

[Operator Instructions] Martin, Michael, Dan, we have received a number of questions, both pre-submitted and throughout today's meeting. And I wanted to start off the Q&A session with the presubmitted. First one reads as follows. What is the current mix of new customers versus existing for each brand? And how do you see this developing over the coming quarters?

Yes. Thanks, Great question. So look, we -- it's important to we look at each brand in isolation because each one is slightly different. Discount Dragon, average number of repeat customers is around about sort of 18,000, 19,000 based on the last 6 months. What we spoke about earlier is that the focus on getting more people to come back. We've improved the proposition and improving the proposition, we're now confident that people will come back more frequently. We've added things like more coffee with anything like cleaning products. And all of these things help you not only get to the GBP 40 threshold but give you a reason to come back. So not only can you fill your basket with snacks and treats, you can also fill it with cleaning products, tea, coffee and essentials. So and then that will improve the better Basket Margin, better Basket Margin makes ultimately for sort of more operational profitability and allows us to then invest more money into marketing and attracting new customers. So on Nutricircle, sorry, the intent for customers is very, very high already. And one of that is down to the core proposition that we've got and the sort of actual intent of customers to buy us for the health and wellness products. We've seen the repeat customers rise consistent at the beginning of the year, we were attracting around sort of 5,000, 5,500 repeat purchases. In August, that was nearly 10,000. So it's a massive improvement. So you can see it's going in the right direction. And the more repeat customers that we get, the more profitable that business becomes and with improvements in Basket Margin, all of this just helps us march along on sort of the profitable cycle. But repeat customers aren't really, really important.

And I think just to add on Nutricircle, we are going to invest in new customers because we've got such a solid repeating customer. So I'd anticipate in quarter 4, our average order value, which is growing considerably in the last 2 months to be maintained because we will have probably a high proportion in [ year ] whose AOV tends to be GBP 2, GBP 3 less. So we want to add to that base because we're confident as soon as we add to that base, they'll return very regularly, which is obviously very positive to sales and profit going forward.

And I think it's about that rinse and repeat model that we've got. We've absolutely got it right with Nutricircle. Boop is pretty much at the beginning of this journey -- at the beginning of this year, we had about 1,200 repeat customers that have grown from very modest beginnings in September of last year. In August this year, we talked about some 7,000 orders, but there's going to be about 3,500 of those will be repeat. So you can sort of see that about 50% are repeat and 50% new. And I think as Dan alluded to, we need to grow that base and growing that base we'll get more and more repeat customers. We can see the trend in that. We can see high levels of intent, and we feel that Boop will very much follow the same pathway as Nutricircle, high intent, decent Basket Margins and a march to sort of its solid profitability.

Fantastic. Moving on. Do you expect the funds raised in July to be enough to carry the business to full profitability.

I mean as per the statement, first of all, getting a big institutional investor on board, a large institution was a major milestone for the business. Adding more institutions to the share registry in my view is a good thing. The additional cash has helped strengthen our balance sheet. But I mean the most important thing here is our move to operational profitability and as we keep moving and we keep on that trajectory, then we will move to group profitability. And that with the reserves that we've got at our disposal will allow us to do that.

Next question. What do you think is a realistic target for group AOV in the coming 12 months?

Look, we continue to focus on AOV. But again, you've got to sort of break this down into individual brands. So let's just start with Discount Dragon. AOV is really important, but the most important thing here is Basket Margin. And as I spoke about before, at the moment, we probably average around sort of GBP 45, GBP 50 per order, including VAT. But if we went over to GBP 60, which everybody immediately think that was great, adding the GBP 10 of AOV. But in most cases, because of what we ship being cans of Coke or large items that would tip us into a second box and in tipping us into a second box for delivery that means we've got another delivery charge, we've got another box to pay for, and we've got more picking and packing. So AOV is important, but what is important is Basket Margin. And I would say, really focusing on the Basket Margin and the improvements that we made on that, whilst maintaining a solid AOV sort of GBP 40 net of VAT.

Yes. I think from Discount Dragon and Nutricircle perspective, we've got a formulaic approach, which is now driving consistency. So for me, the AOV will remain constant and so will the Basket Margin. What we have to do in DD is get more returning customers. But the returning customers will still hit the same AOV and Basket Margin because of our disciplined margin approach. And Nutricircle has seen big gains in Q3. And I think Q4, whilst adding new customers will drop the AOV, the returning customers will maintain it. So overall, it will be a maintained position on both AOV and margin. And then from a Boop perspective, it's really inconsistent because of the choice in products that we're currently offering. But we know when we get that right, that immediately increases by GBP 5, GBP 6 to the level of the other 2. So we're pretty confident that once we get better choice in the key categories, particularly in hair care, accessories and cosmetics, then the GBP 40 delivery threshold will be attained. And we're confident that we do buy at the right price. So we'd be confident that we'd get our Basket Margins that are very similar to Nutricircle. So we -- on 2 out of 3 brands, we've now got a formulaic approach. We just need more returning customers and more new customers for Nutri. And on Boop, we know what to do, but the key to unlock the door will be much improved supply. And we're doing the hard jobs on that, and we will continue to do it. This business is only a year old. So we do need to forge relationships, both with wholesalers and also with the brands directly because to Martin's point, GBP 3.6 billion of waste is something that we can do something good about, but it will be that formulaic approach to AOV.

Moving on to the next one. What are your expectations for Q4? Should investors be excited about what is possible this coming quarter?

Well, we're excited about quarter 4. I mean, to be honest, we remain excited every day, I think when we get because certainly, as I call Mike every morning at 8:00, I'd like to think...

I'm not always excited about that. But he does call every day at 8.

But it's -- we've moved -- we've had a big step change in the business. AOV and Basket Margin has improved. We talked a little bit about AOV. We talked a little bit about Basket Margin. Just to give you sort of Nutricircle as a good example, by actually adding a few more products to the mix, adding more choice has actually improved our Basket Margin. Increasing Basket Margin just on that brand by 50p an item would actually increase profitability by around about sort of 40% based on current metrics. So you can see that the pendulum doesn't need to swing much in order for this to become a really, really exciting business. We're really excited about Discount Dragon. We're excited about the changes that we've made. We're excited about the new products and the product mix we've got. We're having great talks with some coffee producers about sort of surplus coffee in the sector, whether it be pods, whether it be instant coffee, whether it be beans or filter coffee. We're having great conversations on Nutricircle with some big, big names about taking different products from them. We want to add vitamins on to there. We want to add more wellness products. We want to get the breadth of offering. And in Boop, we are as excited today as we were the day that we bought the business. It's an amazing business. The ability when we get the right products for that business to absolutely light up has never been stronger. So yes, in theory, we are really, really excited. We look forward to quarter 4. We look forward to the busy period that we've got ahead of us. We look forward to strengthening Nutricircle's offering ready for the busy January that it has. Quarter 4 is not necessarily the busiest month for Nutricircle. It's normally January, but in strengthening our offering, we're going to be ready for that.

Yes. I mean, importantly, we -- and it sounds obvious, but the planning the team are doing now is so much -- is looking forward so much more than it did. So we've got pretty clear plans about how we'll turn up in Black Friday in November, which is obviously a peak period, especially online. And that that's just so important that we have the right products, but we know what to do now as we sit here at the end of September. So I think, yes, reasons to be excited. We strengthened the team within Boop and the knowledge of the supplier base that we need is now there. So it's clearly the #1 priority, which does make me excited because I'm a lot more confident that we're knocking on the right doors.

That's great. Another one looking into 2026. What are your ambitions for 2026? And how much do you think you can grow this business next year, if you had anything else to add there?

My ambition is for Martin not to call me in the 8:00 in morning.

Unfortunately, you can't always get what you wish for. We've got great ambitions for the business. The move of our fulfillment center will really help us accelerate this business. We've always strived and wished for a sort of Amazon type delivery service. We'll be able to deliver that. DD is about now the focus on repeat customers. And once we get to home, we can then press the sort of the marketing accelerator. Nuticircle is about broadening our offering. We've grown a lot in the last 12 months, but we see a lot more growth in this brand. Broadening the offering will help us do that. It's going to help us improve Basket Margin and profitability.

Yes. I think the platform that we've established on DD and Nutricircle means that we can invest in building the personality of the brand. And I think we've got some customers who video themselves opening the boxes and they are genuinely brilliant videos, just delighted in the value that they're getting, sometimes on quirky products that they wouldn't necessarily ordinarily put in their [ Tesco ] basket. I want to develop this because I think we can make dealing with Discount Dragon fun because of the nature of the products. I think from a Nutricircle perspective, again, developing a personality in sports, wellness, nutrition, broadening the offer to complement the fantastic range of protein bars we've got, we can do. We've got -- we're even -- we're close to taking the first delivery of product from a well-known wellness retailer in the U.K. That relationship is only going to continue to develop. So I think making sure we've got the right platform on our product metrics and giving our customers more consistency in our proposition will enable us to become much more aware, people to become much more aware of who we are and what we stand for because ultimately, yes, we do deliver great value, but we're also preventing waste, which is a very good thing to do. And at the moment, we're not concentrating on that because we've got to do the nuts and bolts of the business. So I think that will start to come to fruition in 2026.

Yes. Look, I think starting a business is never easy. Starting and growing a business is never easy. A lot of people expect this sort of 45-degree trajectory, and it's not like that. There are challenges, there are things that are curveballs that get thrown at us. We deal with them on a daily basis, and we come back stronger and more determined every single day. So I think 2026, we want to move this business. We want to get it into group profitability. We all hate it when we're not making money. But we can see the trajectory. We can see the pathway. We can see we're on the right path to do that. We can see that we've got the resources. We see that we've got the team now around us to achieve that. So I think we're all -- certainly at this side of the table, we're all very excited about 2026 and what it can deliver for not only us but also shareholders.

Fantastic. Now moving on to some live questions. Admin costs are 11x gross margin and have grown by 30%. What is the business model that sees admin costs covered gross margin? When do you expect that to happen?

I think as Dan alluded to earlier on, this is about strengthening the team. This is about planning for growth. This is about planning for success. Yes, our admin costs are high, but we see the growth of this business being big. We see this being a big business. We're not planning for this to be a small mom-and-pop business. We're planning for this to be a sizable business. We've touched on the amount of surplus that there is to waste. We've touched on how we've done the step change in discount. We touched on the growth potential for Nutricircle and also the real potential in Boop. So what we've done here is we plan for success. So yes, it's painful. We're acutely aware of that. But in doing so, we've got to have the right team around. So if we haven't got the right team, then we're never going to grow. So we've invested in that, and now it's about us delivering that growth top line and ultimately bottom line.

And perhaps one for you, Michael. It's clear why Mike's knowledge and experience is a positive for Huddled, but it's not clear what the attraction is for Mike given all his other business interests. Mike, if you could explain this to this investor, please?

I think the investing question may have got the wrong, Mike Ashley. Unfortunately, I'm a lot poorer than the guy. And fortunately, I'm a lot less busy -- as I am very busy, but I'm a non-exec director in Midwich plc, and I've been for 8 years. And yes, my background is retail, but I'm not -- I think the Mike Ashley in question. So hopefully, that's that on the board. That's why we've been referring to me as Michael, which is only what my mom normally say. Yes.

The next question is on the share price. The company's share price indicates the market is not yet convinced. What do you need to do to change the mood?

I think we've sort of gone through that. I think establishing a platform where we deliver consistent operational profitability is the #1 priority, and we've made a step change in that over August and September. These are significant improvements. You're looking at big, big profit swings. We've got now a formulaic approach to delivering much better customer choice and customers are responding as they will. We've done that on the 2 out of the 3 brands, and we've said how we'll build going into quarter 4. It's clear -- there's a clear plan and it's up to us to communicate that. From a Boop perspective, because it's only a year old, we've got to build that base. And once we've built that base, we'll be well set for a successful '26.

And I think as the largest group of shareholders with management we're probably never been more relaxed about where we are today and more excited about the future. We all know that the end market is struggling. We all know that it's hard out there. It's hard for investors. It's hard for businesses. But I feel we're on the right track. And this was never going to be an instant sort of, wait. I think if people want that, then you're better off investing in crypto or in mine. What we wanted to do was really build a business that had longevity, build a business that was a force for good and build a business that was profitable. Yes, it's probably not got there as quickly as some shareholders would have liked, maybe as we would have liked. But the reality is we are on the right track, and we're making massive leaps forward into building a business that is sustainable, profitable and equally as importantly is a force for good in the sort of current landscape.

Understood. And next up is, are there plans to introduce subscription models to improve recurring revenue visibility?

No. We don't particularly like subscriptions. I think we want to give customers the choice. We want to give them a reason to come back, not rely on subscriptions. Our focus really is on great products at great value. You also got to remember that we're doing surplus, and it's very hard in the surplus world to do subscriptions, because our product offering can change and does change. So we're very much about value and what you think, Mike.

Yes. I think, look, subscriptions are quite a clunky tool to drive loyalty and loyalty is incredibly important. But ultimately, we sell products. And if we do a good job, people keep coming back. So loyalty is driven by the choice you offer and the service you offer. Choice has definitely improved markedly over the last couple of months, service not so. And we're really facing into that and the move to 3PL will help. I think can we do more to entice our already loyal customers to shop maybe weekly rather than monthly? Yes. Is that priority #1? No. I think -- but you will see in 2026 has developed. I think what I'm grateful for, we've got a very, very good CRM system. Experienced many. This is as good as it gets. And with the data we've got in Shopify, we've got all the tools to be able to target each of our customers with different offers. That's where we've got to spend our time and effort. But there's no point doing that until you've got consistency of product choice. So it's all about the sequencing and that will come in 2026.

Perfect. And the next question we've got here is, could you please state whether the head office costs are set to remain fairly stable in H2 2025 and beyond?

Yes, I'm happy to say that. I would say, yes, relatively stable. I mean we have made some additions and strengthen the exec team as everyone will be aware. So I would expect a small increase, but broadly the same, I would say, in the second half.

And the next few questions are on the THG partnership. You say the THG move will be completed by Black Friday. But can you please add more color as to how this process will flow? And can this date be beaten?

I think to say it can be beaten, I'm not going to create a hostage to fortune because you've got to remember, as I said, we've got 40 articulated lorries to move. And anybody who's familiar with our current location knows that we were on the third. floor of an old mill. We have to move all of those items in a lift. And once we've got a couple of lifts, it's -- one of the lifts is a shared lift. So we have to do this at weekends and throughout the night. So it is a complicated piece. We're a long way down the track in terms of getting moved. I'm confident that we will do this as quickly as is humanly possible. We have people working sort of night and day on this, and we've got a really experienced team as well as the sort of THG team who've done this many, many times before. But we've got to get it right, not only if we got to get it right in terms of moving the products, we need to make sure that there is no break in customer service, and we continue to supply people's orders throughout this whole process. So probably that's not the answer that anybody wanted, but it's the best one I can give with the information. We're helping to get this done.

Yes, we are as quickly as possible. But what we cannot do is pick from 2 locations for the same customer. So there's a lot of thinking and planning gone into this. And next 4 weeks is going to see us move. So it's -- we're building.

Another one on THG. Are you beginning to see any traction on deals with THG's existing customers?

Yes. I mean we're starting to see so I think that will improve tremendously once we're in there because we've talked historically about the ability to deal with surplus product from some of their partners without ever having to move location therefore, reducing carbon footprint, making it easier for them to turn surplus into cash. So I think that position will 100% be improved once we're in that location. But so far, we've done a number of deals, and we think that will just become bigger, faster as we move forward.

Yes, especially for Boop. So in 2026, there will be so much more opportunity to work with THG on all their great brands.

Fantastic. And the next question is, why is Q3 total revenue expected to be less than Q2?

I don't think we've given any forecast on revenue.

We did send, we expect sort of 4.9, I think I think yes, this is a focus on, I think the sort of more quality orders and Basket Margin and emphasis on looking for Basket Margin. I think...

Yes. So I think it's important that we get operational profitability rather than unprofitable sales. So we've deliberately stopped, looked to the business and basically turned both Discount Dragon and Nutricircle into operational profitability in August and September at the expense of some sales. There's -- some days, we were selling very, very unprofitably before we took the formulaic approach and gave the balanced basket approach, which is what we've talked to. And so this is what I talk about in terms of establishing a platform for growth. We've now got that platform. So I think in quarter 4, you will see that improving as we move through. But I think we continue to be focused on Basket Margin. Profit per order or Basket Margin, as we call it, is just so important. And we will now spend our time focusing for Discount Dragon on those returning customers. We were attracting a lot of customers for one-off buys and not making any money out of it. That business, we've kind of walked away from, which I think is a really important stepping stone for not only the business for the team. Because it is a different way of operating. And we -- I think we've been guilty in the past of picking up deals and then maybe not having as strong a hit rate as we would have wanted to. I think now what you're seeing is consistency and a move to operational profitability, which I do believe is more important than just driving revenue that doesn't make money.

That's great. Perhaps one last question as we reached the 1-hour mark. Are you considering any additional business segments beyond the current 3 divisions?

No, I mean, there's nothing on the radar at all at the moment. And as Mike alluded to, our focus really is consistency and profitability. And that is the sort of the mantra as we move forward, the mantra in quarter 3 and the mantra in quarter 4. It is about getting the right customers. It is about getting those customers to come back. It's about building on Nutricircle, building on the growth and solid foundations we made there, improving the product mix at Boop and also getting transitions to THG for our fulfillment. So I think we've got plenty to do in quarter 4 as we described

And there's a reference to admin costs earlier, but we do have a young and hungry team, but they are quite stretched too. And when I've looked at how we're set up from a commercial marketing perspective, we're not blessed with big numbers. And I think it's important that whilst we don't increase our expenses going forward in administration until we drive growth, it's really important that those guys are focused on driving the consistency. And that's where we are.

That's great. Well, look, guys, you have covered a lot of ground there. So thank you very much indeed for addressing those questions from investors. And of course, the company can review your questions submitted today, and we'll publish those responses on the Investor Meet Company platform. But Martin, before I redirect investors to provide you with their feedback, which I know is particularly important to the company, could I please just ask you for a few closing comments?

Yes. Look, I think -- thanks very much, first of all, for everybody attending. I know it's taken an hour out of your Monday morning. So we really do appreciate that. I think as the business stands today, we are probably more excited today than we've ever been on this journey. We've got a really strengthened sort of senior management team. The team below Mike and the team that work in each of the brands are amazing. They've done an incredible job. We've seen some massive leaps across the piece. We've seen massive leaps in discount Dragon in terms of moving to profitability and the consistency. We've seen massive leaps from James and his team at Nutricircle, who really rocketed that business beyond our wildest expectations. Over 700% growth in orders is amazing. And I think we'd like to thank the Boop team and also the new additions to that team who are really helping us strengthen our product proposition and will help us take that business to where it deserves to be. So overall, thanks very much for being shareholders, those of you who are, those of you who are interested, please do come and join with us on the journey. And we've got a lot more to deliver. And I think as we said right at the top of the thing, hopefully, we're a force for good and a profitable force for good.

Fantastic. Martin, Michael, Dan, thank you once again for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the Board can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Huddled Group plc, we'd like to thank you for attending today's presentation, and good morning to you all.

Thank you.