Welcome to the Boohoo PLC Q1 trading update call. Throughout the call, all the participants will be in listen-only mode. Afterwards, there will be a Q and A session. Today, I'm pleased to present John Lyttle, CEO, and Neil Catto, CFO. Please go ahead with your meeting.
Good morning, everybody, and thank you for taking the time to join us for our Q1 trading update call. I'm John Lyttle, Group CEO of the Boohoo Group, and I'm joined this morning by Carol Kane, Executive Director, Mahmud Kamani, Executive Chairman, and Neil Catto, Group CFO. I'm gonna take you through the Q1 update, and then we'll open up the call to Q&A. So in terms of group performance, we'll start off with there first. So it'll come as no surprise to you all that COVID-19 has continued to impact on all aspects of our business. I'm incredibly proud of how everyone within the Boohoo family, as well as our many partners, have responded and adapted to these difficult and unprecedented circumstances.
Throughout this period, our priority has been, and continues to be, the health, safety, and wellbeing of all of our colleagues, customers, and suppliers from around the world. With this in mind, I would just like to briefly remind you of all we have been able to achieve over the last 15 weeks. We've transitioned all of our teams to remote working, where their roles does not require them to physically be in the workplace. For those remaining in the workplace, we have revamped our operating processes to ensure social distancing is in place, rigorously implemented updated health and safety guidelines, and made sure we are following all government health protocols. Social distancing procedures within our warehouse are working efficiently, ensuring the safety of our warehouse employees.
We have also been extensively engaging with local stakeholders such as MPs, council leaders, and public health authorities to update and reassure them on our actions. As a group, we have a diverse supply chain across the world, and this has continued to operate efficiently with our teams in regular contact with all our suppliers. We have worked hard across the business to ensure the continuity of service in getting our products to customers, who have experienced minimal disruption to date. We have provided full pay for colleagues in self-isolation and are in a fortunate position whereby we have not needed to take advantage of any government-funded schemes. On to the results for the period. We are delighted to report a strong performance for the year to date.
Revenues for the quarter totaled GBP 367.8 million, up 45% year-on-year, and we continue to take market share both in the UK and internationally. Trading, as you might expect, has been mixed across the quarter as a result of the impact of COVID-19 pandemic. We saw a marked decrease in the growth rate in mid-March and early April, but trading improved during April and May. Our strong performance has been helped by maintaining an excellent customer proposition during the quarter, which has ensured we are able to get the most relevant products to our customers quickly. You will have noticed from our release this morning that we are reporting group performance and performance by region only in our trading statements going forward.
In the UK, sales grew 30%, and our international markets took another great step forward with sales up 63%. For the first time, international revenues accounted for more than 50% of the group revenues, and we have delivered strong growth in our international focus markets, with Europe up 66%, US up 79%, and rest of the world up 22%. This strong growth across the board in our international markets demonstrates how our brands are appealing to customers on a global scale. Following the acquisition of the remaining 34% stake of PLT, at quarter end, we had seven 100%-owned brands. Growth was strong across these brands, reflecting our focus on the multi-brand strategy and growing share of wallet across our customer base.
We had a gr eat performance from our established brands, Boohoo, PrettyLittleThing, and Nasty Gal, while our newest brands, MissPap, Karen Millen, and Coast, continued to trade strongly and contributed further growth in the period. Karen Millen and Coast only went live in October, so it is still very much early days, but we are really encouraged by their contribution to the group so far, which has been ahead of early expectations. On to gross margin. Despite the uncertain backdrop, during the period, we have delivered a solid gross
margin performance, up 60 basis points year-on-year to 55.6%. We continue to benefit from our test and repeat model, which allows our teams to back the winning categories and trends that have emerged through this period. Areas such as loungewear and athleisure have performed well as customer buying habits adapted to a stay-at-home lifestyle.
We've seen a great response to our social media content during lockdown, which has become more lifestyle-oriented. While we're pleased with the start to the year, we remain cautious on our outlook for the gross margin, particularly given the potential for promotional intensity to increase as the high street reopens its doors. I'm also delighted this morning to be announcing the acquisition of two new brands. We are acquiring the brand and associated IP of Oasis and Warehouse. These are well-known U.K. brands which complement our existing brand portfolio and further strengthen our position in the womenswear market... As a group, we are really now dominating the youth end of the market, and through our multi-brand strategy, we expect to continue to gain share of wallet from our customers.
Acquiring the brand and IP only at great value mirrors our approach to previous acquisitions of Nasty Gal, MissPap, Karen Millen and Coast. In line with previous acquisitions, the group will, in the coming months, integrate Oasis and Warehouse onto our platform, allowing both brands to benefit from the group's insight, infrastructure, supply chain, and operating model. We have a strong track record of integrating new brands quickly. It took us only eight weeks to relaunch Karen Millen and Coast last year, plugging in a whole new supply chain and reducing their lead times towards the rest of the group. The recent placing of GBP 198 million has further strengthened our position to make opportunistic acquisitions, and today's acquisitions are another great example of that.
We continue to believe there will be further M&A opportunities arising, and have finished a quarter with over GBP 350 million of cash. We are in a strong position from which to take advantage of these. Lastly, on outlook, we are feeling positive as we look ahead for the rest of the current financial year, and we expect to deliver another year of strong, profitable growth. Revenue growth is anticipated to be approximately 25% for the current financial year, and we expect to report an adjusted EBITDA margin of 9.5%-10%, both of which are ahead of current market expectations. Our revenue growth assumption assumes a small contribution from our newer brands acquired last year and today's acquisitions.
We remain cautious, given we expect an ongoing period of consumer uncertainty, likely promotional intensity in markets that we operate, as well as continued near-term carriage inflation for some of our overseas markets. The guidance also reflects planned investment in both our established brands and in launching our newer brands during the year. We will continue to invest in our infrastructure to support future growth ambitions, and capital expenditure is expected to be in the region of GBP 60 million-GBP 80 million. The strength of
our trading and operational performance in the period further underpins our confidence in our medium-term guidance of 25% sales growth per annum and a 10% adjusted EBITDA margin, which remains unchanged. In summary, we've been busy. It's been a great start to the year.
We've delivered strong growth, continued to take market share, acquired our option in PLT, and are welcoming a further two brands into the group, meaning we now have nine 100% owned brands operating on our platform. And with that, thank you very much for listening, and now we'd like to open up the call for questions.
Thank you. If you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. The first question is from Aneesha Sherman from Bernstein. The floor is yours.
Hi.
Oh, wait. Sorry.
Congratulations on the results. Two questions from me. First, on the two new brands, are you planning to maintain the brand, the brand's current wholesale channels, such as the major department stores, as well as the direct-to-consumer online sales? And second, on CapEx, you've talked in the past about eventually setting up distribution infrastructure in the U.S. Given the very strong growth in the U.S. market this year, have your plans changed on the timing of that CapEx? Do you expect to bring it forward? Thank you.
So in terms of the two new brands, and in terms of how we plan to run it, it's very similar to our acquisition of Karen Millen and Coast. So the brands currently were multi-channel, but we will be taking that to pure play online only. So we won't be trading in the stores, but we may consider wholesale options as we do with our other brands, Boohoo and PLT. So for example, we sell those into ASOS, Shop Direct, etc. So a similar model to how we operate our other brands. In terms of U.S. infrastructure, we are looking at warehousing. We've spoken before about our current capacity, which has about GBP 2 billion of net sales.
Further works we're carrying out on Sheffield and in Burnley get us, in calendar year 2022, to about GBP 3 billion of net sales. As you well know, warehousing takes time to plan, to build, and to get operational. So we're just in the middle of finalizing where our next warehouses will be at the moment. And we expect to have that decision in the next couple of months, most likely overseas, and looking at two options. One is the USA, and one is Europe.
Probably worth saying that the CapEx guidance of GBP 60 million-GBP 80 million is all centered around those big projects that John mentioned in Burnley and Sheffield. So there's nothing in there for the overseas warehouses this year.
Okay. Thank you.
Next question is from John Stevenson.
Morning, guys. Looking like a nice, quiet quarter to start us off. First question: could you talk a little bit about some of the sort of customer trends in terms of frequency, conversion rate, basket, just in terms of how people have been shopping, or the implication being a quite phenomenal level of sales performance over the last couple of months. And secondly, on marketing, can you give an indication of how, you know, you've led engagement to the extent that it's been through sort of social and content, and the extent to which you've, you know, delivered, you know, marketing spend through the period as well, please?
Hi, John, it's Neil here. So on the customer trends, you can imagine with the growth that we've seen overall in the quarter, that you've got positive trends on across most of the KPIs there. So what we've actually seen is frequency being maintained, if anything, and in quite a lot of cases increasing marginally. And then what we have seen overall in the quarter is a trend whereby we've seen a lot of browsing behavior, so kind of shopping for entertainment in lockdown type of phenomenon, which has meant that you generally have quite high session growth, but the conversion rates are not so high. So those are the trends that we've seen.
We've actually seen transaction values slightly higher than they were this time last year as well, but that's been a trend for a while anyway. But customers have certainly been spending once they've adjusted to the kind of lockdown scenario. While there was a period earlier in the quarter where they stopped for a while, they've come back and you can see from the numbers with a vengeance.
Okay. And what sort of active growth-
Sorry?
Sorry, Neil. Like I said, just, what sort of active growth have you seen?
Well, we're not disclosing the level of active growth, but we've seen good customer acquisition trends. And therefore, you can imagine that we've seen good growth in active customer numbers. And on the marketing question, Carol, do you want to take that?
Yeah, yeah. Morning, John. I'll pick that one up. So it's very much the same picture that we talked about at the last set of update that we gave. It hasn't been the big bang campaigns that you're used to seeing from the Boohoo Group. It has been a little bit more video content, social channels, working with influencers who are actually shipping from home. So it's been more of that with an increase, probably across social spend and digital spend. There's been some above the line advertising, but it is minimal compared to what you're used to seeing. So there's no real change there. It's really as we updated our last set of results.
Okay, brilliant. Thanks a lot. Does that mean that the sort of marketing spend is gonna be less than we're used to seeing as well?
No, it's just deployed differently. It's just a channel mix change, you know.
But with two new brands!
Okay, brilliant.
It's only me.
Right. Okay, thank you very much.
The next question is from Charlie Muir-Sands of Exane BNP Paribas.
Yes, good morning, guys. Thank you very much for taking my questions. I've got two, please, and please accept my apologies for the background noise. The first one relates to the pattern of trading, and I appreciate you probably don't want to be drawn on to the detailed granularity, but I just wondered that as various markets have kind of unlocked, I wondered what your experience has been that's led you to what's an implicit, quite significant level of conservatism around the growth rates for the remainder of the year. Are you seeing, you know, the sales growth sort of drop off in recent weeks as various markets see their high streets reopen or not?
And then the second question was kind of related to Karen Millen and Coast, and I appreciate you don't want to be reporting brand breakdown on sales performance today, but I just wondered what your experience was vis-à-vis the fact that clearly they were historically multi-brand, and whether you think that some of the historic revenues those brands achieved on the high street, as well as on their online channels, was actually whether you're capturing some of that as well. Thank you.
So on the pattern of trading, what we've described in quite a lot of detail, the pattern that we've seen through the quarter, so we saw the initial drop off and a recovery, and then. And it was probably only a few weeks ago that we spoke to everybody, where we said that trading was robust. But you can see from the overall numbers that it's been extremely robust in the final weeks of the quarter in May. And we've seen that momentum carry on, basically. It's really too early to comment on what is happening during the release of the lockdown restrictions.
Because what I would say is that, if you take the UK, for example, it's been two days, and you can see from what's been reported in the news that the high street stores have really been challenged in the way that they've come back from lockdown. So you're not seeing any impact there right now, but it's just too early to say. And that then brings me on quite nicely to the fact that we've been, as ever, sensibly conservative with the guidance for the rest of the year. Because I think we're still in a position where there's so much uncertainty that's been caused by the whole pandemic situation that it's really, I think, more than ever sensible to be conservative with the guidance for the rest of the year.
So there's uncertainty around what the promotional environment is going to be like. So far pleasantly surprised. It doesn't look like the high street brands are really going out with huge promotions, but we would definitely expect there to be quite a competitive environment going forward. We've also – I think the government schemes have been great at cushioning the impact for consumers, but of course, we'll see how that consumer environment gets affected for the rest of the year. So a lot of uncertainty there. Of course, if consumer sentiment's negative with a recessionary environment, we're very well placed as a predominantly value suite of brands at the moment. But if there's a switch to value, then we'll be well placed to benefit from that.
But having said that, there's a lot of uncertainty around. And that's why the guidance is sensibly conservative as ever.
Great. With respect to, to the Karen Millen and, and Coast, experience so far?
Yes, I think we're -- As I said, we're really pleased with the experience so far. Your question around are we getting some sales from the high street closure of those stores, I'm sure we are, in terms of overall. But I think, you know, again, just to remind everybody, we relaunched Karen Millen and Coast on the first of October. That was a soft launch at that point, and then sort of got through peak, came into the new year and then came into COVID. So overall, we've turned around the supply base. 80% of the suppliers are new to Karen Millen. We've got them and everybody now working on test and repeat. Reactions are really pleasing.
In particular, I'd probably highlight the international reaction for Karen Millen and Coast. So, in particular again, there I'd highlight the US. So again, you know, a brand that we can take globally, and one that will be a real key strength of the group going forward.
Great. Thank you.
The next question is from Anne Critchlow, Société Générale.
Just as a follow-up to that, could you say whether Karen Millen and Coast were previously in the U.S., and how you developed the sales there? Was it marketing, for example? Then I've got a second question on marketing. Whether you see opportunities for marketing to stay online and through social, rather than going back to outdoor post-lockdown, or whether you need to move back to outdoor.
Did I take the Karen Millen one first, Carol, and then, so the-
Yeah.
Okay. Yeah. So Karen Millen, in terms of the U.S., I mean, they had some stores in the U.S. and had a business level there. So we've really not done anything in terms of pushing sales in the U.S., and that's really pleasing in terms of when we do begin to push the button on marketing there, the opportunity we see will be very, very strong for us.
Thank you.
So yeah, if I can just answer the marketing one. I think it's important as a group, just like our test and repeat model, we have the same approach to marketing. And not all brands are in the same place in terms of brand awareness. So, for example, bringing in new brands into the group, just from October with Karen Millen and Coast, and now Warehouse and Oasis and Miss Pap, we still have -- we'll be doing quite a lot of brand awareness pieces around those brands, which will mean some out-of-home advertising, TV, et cetera, et cetera. That's not to
say that we won't be doing more of that on our other value brands as the market picks up. So I always approach it pretty much with an agile approach, is mix up the channel mix.
Don't make it all digital, don't make it all social, and have a varied marketing mix across the group. But as I say, different brands are at different stages of their life cycle of being online, and that's a very tailored approach for each brand.
Great. Thank you.
The next question is from Adam Cochrane, Citi.
Good morning, guys. 2 questions from me. First of all, good regards to an incredible performance to get all the product on the sourcing side and the warehousing side. Were you able with other competitors, we've heard maybe canceling orders and things. Have you been able to get any more stock or better pricing, et cetera, because of the external environment? And then secondly, on the costs of COVID, you talked about maybe air freight being a bit higher. Does it change with social distancing your warehouse throughput at all? And when
you think about your guidance for the EBITDA margins for the rest of the year, I'm assuming that incorporates any COVID-related costs that you may be incurring.
If that was to change, would that mean that there is some potentially more efficiencies you can get from your warehousing operation? Thanks.
So if I address the first one first. So in terms of the warehousing, I think very early in the early days of the pandemic, we identified the warehouse as being a really critical operational part of the business that we needed to get right. So that was really one of our first areas that we put lots of new ways of working, processes, increased hygiene levels, et cetera. So we were onto that as almost like our first step. So I think we were ahead of the curve of maybe some of our competitors. And you'll see from our service promise right through the pandemic, you know, we've been pretty much on our normal service right the way through.
So it shows the early work paid off very quickly, and the implementations we did there. From a sourcing point of view, look, we've got a very strong supply base, and we're very, very close with our suppliers across all regions that we source from. And clearly, as our competitors were canceling, and equally, shall we say, maybe not as fast on payments, you know, kind of factories have workers, and they need to keep working, and they need to get paid. So I think in particular, if you look at our 14-day payment terms, you know, we were, we were very attractive in the period. Number one, we were continuing to place orders, and number two, we were paying, and number three, we weren't canceling.
And then on the cost side of things around distribution costs, you've got two elements there. As you pointed out, that we've implemented the social distancing in the warehouse. And on the throughput side of things, we've managed to keep the throughput going through the whole period, and that it was slightly affected in Sheffield for a while, but again, that operation recovered very quickly. That's not been as much around social distancing as around absence rates, which have subsequently returned back to normal levels. So social distancing in itself
has not been materially impacting the throughput. And I think we're quite fortunate in both operations that we've got plenty of capacity right now. But obviously, with those absence rates, et cetera, you get an increase in cost.
And also, on the distribution costs, we've seen higher costs from our distribution partners, particularly overseas. So mainly actually on the overseas routes, the distribution costs have been relatively consistent within the UK and Europe. But in the far away markets, we've been paying extra to secure capacity on freight transport. So that's led to an increase in distribution cost, but what we've seen in the first quarter is that those have been mitigated by the fact that we've had lower returns rates from a different product mix. And as we've alluded to, we've seen quite effective marketing in the lockdown period as well with the performance marketing.
In regards to the EBITDA margin for the rest of the year, again, we're anticipating that some of those factors could change, and there's a lot of uncertainty around that going forward. So it's likely that the distribution costs will remain elevated, but the fact is that returns rates could return to more normal levels if that's what happens with people's activities when people are going out more, et cetera, after lockdown restrictions are eased. So you've—again, you've got that conservative is in there, that if distribution costs continue at that rate, but we don't see the continuance of the other positive mitigating factors like the returns rate.
We've also seen a strong gross profit margin in the quarter, as we've seen a bit less markdown because we've had a very, very fast stock turn as we've been chasing the stock rather than having a lot of stock that we've had to mark down. It's been the opposite scenario to that.
So is it fair to say that the 9.5%-10% EBITDA margin guidance, at the low end of that 9.5% is, if some of these costs were to carry on, and the 10% would be if they were to fade away?
Right. Exactly, yeah. And also, you've got to think about the gross margin performance as well. I mean, we're in great shape coming out of the quarter into the next quarter because we've got a very lean stock position. We've got lots of newness coming through. But we also think that there's a good possibility that it will be a very competitive environment out there.
That's right. Thank you.
The next question is from Simon Bowler, Numis.
Hi, good morning. A couple from myself. Firstly, with regards to return rates, is it purely kind of a product mix impact that you think has been impacting return rates, or have you seen any other changes across kind of the more kind of staple normal products that you have been selling? And then secondly, it may be too early to ask this question, but as you know, I get a bit paranoid about these things. Can you share a little bit of color at this stage around kind of the warehouse plans? I think at the moment you've got two warehouses, effectively one for Boohoo and one for PLT. How is the single warehouse for overseas going to look?
Is it gonna have a long tail across products across all of the brands or be specific to any single brand?
So on the returns rate, firstly, we were conscious six weeks ago that people may have had more difficulty returning products in lockdown. But as we've gone through the last few weeks, we think it's pretty clear that the main factor in the lower returns rate has been the change in the product mix. Because the increase in kind of more basic athleisure wear and loungewear, et cetera just had lower return rates, generally.
Okay, great.
Um, and-
And then on the Warehouse side?
The next question is from David Holmes, Bank of America.
Hi, morning, guys. Thanks for taking the question. It's just a quick one on the acquisitions you've made today. Can you just talk a little bit how you intend on positioning those brands and how they give you something different to what you already have? Thanks.
Yeah, I can take that one. So if you think about the group of brands we have today, we're very covered up in the value proposition with PrettyLittleThing, Boohoo, MissPap, and Nasty Gal. And then last October, launching a more premium brand with Karen Millen and Coast on occasion wear. So where we see Warehouse with ASOS is actually bridging that gap into the middle market. Warehouse being very fashion-led as it currently is, and Oasis also fashion-led, but with also a lot of classic inventory as well. I think the first job in hand is to make those
brands more relevant to consumers today than maybe they have been in recent years. So really, it's covering off, and it's plugging that gap that we've talked about when we talk about a Topshop or a Zara.
It's, you know, a higher price point than our value proposition, but a lower price point than our premium collection, Karen Millen.
Got it. Thanks a lot.
The next question is from Vera Raul, Barclays.
Hi, two from me. I know you no longer disclose this, but can you give us any color as to how each of the brands performed during the period, if there's anything in particular to call out there? And second, on further M&A opportunities, can you talk about what types of categories, brands, geographies this might be focused on?
I can handle on categories in terms of where the focus has been during the period. So I think we've pretty much outlined again and again the success of taking a brand that was very much brand-value brands, that were very much about going out and festivals and all that other stuff, and transforming those brands through the period into loungewear, athleisure clothes, nightwear, essentials, that all were the real strong outperforming categories during the period. However, as the weather warmed up, in recent weeks, we have seen a return to more
fashion proposition, which is encouraging, even when we've still been in lockdown. Again, it's still on the casual side, and it's been crop tops, cycling shorts, tie-dye, slogan tees, smock dresses, florals, all performing well.
And then if you look at our premium brands, they've really still been selling dresses, but in more relaxed shapes. There've been some very strong fashion trends around voluminous sleeves and Bardot necklines and so on. But I think the overriding message here is, I think with our supply chain and our test-and-repeat model, we can get most categories to work. And I think the very strong message that needs to be delivered really is, we're so agile in seeing whatever's fashion and whatever relevant is to make sure that we have it. Or with COVID, if it's prolonged through into the end of the summer or we're out of it and we're back into party lines, we'll just be chasing whatever's relevant to the consumer at the time.
We're back, we're back on the line, by the way, now, John and I. Just, we did get cut off earlier.
Next question is from Silvia Cuneo from Deutsche Bank.
Good morning. Thank you for taking my questions. Two for me, please. Firstly, would you be willing to offer any comment on current trading into June? And I know it's very recent, but have you seen any change in terms of traffic or from the store openings earlier this week? And the second question is about sustainability. I appreciate this has been a busy period, but many sources are highlighting that the customer mindset might be shifting towards sustainability faster than we have previously anticipated after the pandemic. Could you talk about what progress are you making, or could you highlight any recent milestones on your sustainability journey? Thank you.
So just quickly on current trading, like I've just said, it's too early to see. What I'd say is that the high street retailers in the UK haven't got their lockdown restrictions eased quite so readily. They're open up, but I don't think they're gonna get to volume in the two days that we've seen. In other markets, we've seen continued strength, but can't say thoroughly say much about what's happened in June other than that.
... and then on the sustainability side?
I mean, obviously, sustainability, even though it's been a busy period, we continue with our strategy, which is in effect that, you know, we want our ranges to be sustainable, ethically sourced, recycling, et cetera. So we continue on that journey. So even though it's been a busy period, that strategy has continued as normal. Nothing new to report in the period, in the quarter, in terms of milestones reached, outside of, it's a key focus for us. And the industry is changing, will change, and we plan to be part of the group that lead that change.
Understood. Thank you very much.
Thank you.
Next question is from Ben Hunt, Investec.
Morning there. Apologies if these have already been answered. My line got cut off at one point. But, one question for Neil. You've mentioned the leaner stock position. Are you actually able to give us a number where you are year on year in terms of inventory? I think you started the call it was quite high levels.
And-
Yeah.
Okay. Go ahead with the next question.
Then the second question, are you-- There's quite a big acceleration in the U.S. Are you able to give us any more color on which brands were driving that? I presume it was predominantly driven by Nasty Gal.
Yeah. Just on the stock position, we're not gonna disclose what the stock position is, but we've had. It's been really a race to get inventory at different times through the process, as the supply chain's been disrupted. Now, the supply chain is getting back to more normal levels, and happily, that coincides with as the competition's coming back into the market. So we've really been surviving with less inventory than we would ideally like. But now, but it's effective, as you can see from the numbers, we've been able to compete against the
competition, partly because of the... We've still had a great range of products, but also because we've had a great, we've kept our service levels going through that period.
But now the competition comes back, we're building up that level of inventory. So, what I'd want people to think is that we always turn up, turn our stock very quickly. And while there's been a period where we've had probably super low levels of inventory, I'm sure that'll be back to a more normal position at the half year, and that's the steady state that we should be thinking about. The acceleration in the U.S. has actually been across all of the brands that we've—I think because we're very small in the U.S. market, and there's a lot of market share to take, and we've seen a good performance from Nasty Gal, as you point out, but also Boohoo and Pretty Little Thing.
So, all the brands are very, very small over there in terms of market share, so a long, a long way to go, and I think that's what you, what you've seen in the performance during the last few months. I think there's, there's been a, a helpful factor for our business in that the high street stores are being closed a lot, and, we've seen some good customer acquisition numbers in the U.S.
Next question is from Georgina Johanan, J.P. Morgan.
Hi, thanks for taking my questions. I might just repeat Simon's one from earlier. I think you, you cut out, Neil, with regards to, early thoughts around managing international inventory pools. And then also had just a couple of questions in terms of the brand acquisition, the kind of price to sales that you seem to be paying for brands seems to be coming down. Do you think there's less competition to acquire brands in a post-COVID world? And then finally, along similar lines, when looking at further acquisitions, should we think there's kind of a... Should
we be looking at similar size deals, given complexity around warehousing and fulfillment and kind of potential execution over the next few months? Or do you not see kind of a, a limit to, the size there?
Okay. So, yeah, firstly, on the point about warehousing with multiple brands, and I think the question was, how is that gonna happen if you have a new warehouse, whether it's international, most likely. So I think my answer to that question is that, with multiple brands, we have that flexibility. And if you look at the operation in Burnley, we have multiple brands in the same warehouse, where the inventory is stored all together, mixed in for the multiple brands, but the automation knows exactly how to deal with that inventory, and that's quite efficient. So that's how, if we have a warehouse in an international market, we'll be quite able to cope with all of the brands in the same warehouse.
But similarly, if we wanted to have them in separate warehouses as well, it would be a similar level of efficiency. On the M&A side, is there less competition to acquire brands? No, I don't think there is. I think there's actually going to be quite a lot of competition to acquire brands. So, while I think in terms of strategic, one retailer acquiring other brands, as we have done, there may be less competition from that area, but you've always got competition from private equity, and we've seen quite a few private equity deals go through in the recent months, and I'm sure there's going to be competition there.
I think it's a question of the right buyer for the right brand and a fit there is where it is really what it's all about, and for us, it's where we can add value to brands-
... by being part of the group. And that point's relevant when you talk about further acquisitions. Are they likely to be similar deals to what we've done in recent times with Nasty Gal, Karen Millen and Coast, and Warehouse and Oasis, which have been in distress of some sort? And we do think there will be distressed brands that we can definitely add value to and reinvigorate. But there could be more of those type of deals, but also maybe some more established brands as well. Because but we—I think the key factor is that we'd have to see very clearly the plan and where we can add value for those brands post-acquisition to create real organic growth from there.
Next question is from Aneesha Sherman, Bernstein.
Hi, just another quick one, please. Responding to a comment that Carol made about the agility of the buying model. As your portfolio grows internationally, obviously, you have to pay more attention to things like regional trends, weather patterns, as well as, you know, slightly older demographics and a different aesthetic with the newer brands. Can you talk about how you're planning and managing the assortment internationally and across brands as the portfolio grows? And what investments you're making to make sure that you're current in managing the assortment across all of those different target demographics?
So in terms of-
So-
... Sorry, Carol, go ahead.
No, no, you go ahead, John. You go ahead.
Okay. I'll go. So in terms of managing at the moment, it's quite straightforward actually, because it's one pot of stock going out to all of the regions. Clearly, for example, we have some seasonal differentials. So as an example, Australia, summer and winter versus Europe and the USA. So that's one that we plan in. But effectively, the best sellers tend like 99% of the time to be best sellers across all markets. What you see underneath the bonnet of that is probably just different preference and rate of sale on color, on size, or it could be seasonal timing in terms of, you know, when seasons kick off. So today, it's not very difficult to be able to manage that.
The extra complexity comes when we have the international warehouses, and we're managing multiple pots of stock and trading as fast as what we are today, and then the countries that we source from. So as part of the exercise, as we plan the next warehouse and the international warehouse, it's just as big a part of the planning as building the warehouse, as it will be in terms of how we trade and how we manage our pots of stock. You know, is that physical? Is it more AI? Is it changing our sourcing? Clearly in different countries and regions, there are different duty, import duties as well. So getting all of that right is absolutely key, which we're working on.
But we're very confident with the right planning. We can overcome all of those. We won't be the first retailer to have an international warehouse.
There is no further question. I am back to you for any final remarks.
Nope, that's it from us, guys. As I say, look, we've had a really busy quarter. We're really, really pleased. Thanks, everybody, for joining this morning, and catch up with you all soon.
This is now concluding our conference call. Thank you for all attendees. You may now disconnect your lines.