For Immediate Release
7 March 2014
("boohoo" or the "Company")
Announcement of Placing details and Admission to AIM
Successful Placing to raise £300 million
Market capitalisation of £560 million at Placing Price
Trading starts 14 March 2014 on AIM
boohoo, one of the UK's largest pure-play online, own brand fashion retailers, today announces the successful pricing of its initial public offering ("the IPO") and the placing ("the Placing") of 600 million ordinary shares at 50p per share. It is expected that dealings will commence on AIM at 8.00 a.m. on 14 March 2014.
The Company designs, sources, markets and sells the latest on-trend fashions through the www.boohoo.com website to a core market of 16-24 year old consumers. boohoo is a well-established brand in the UK, Ireland and Australia and currently sells its products into over 100 countries.
boohoo is raising gross proceeds of approximately £300 million, £50 million of which will be used to accelerate its expansion and enhance its working capital base. A proportion of the money raised will be used as part of a multi-stage development plan to grow the Company's distribution facilities and repay the outstanding mortgage on its Burnley warehouse, in addition to funding the infrastructure and IT systems to support future international growth. Approximately £240 million will be used to repay the Convertible Loan notes held by the Company's existing shareholders. Following Admission the Board and the Kamani family will hold approximately 44% of the Company's enlarged share capital. On Admission, the Company is expected to have net cash of approximately £50 million.
The Company is expected to join AIM on 14 March 2014 with a market capitalisation at the Placing Price of approximately £560 million.
The Ordinary Shares will trade under the ticker "BOO" and the ISIN number is: JE00BG6L7297. Zeus Capital is acting as NOMAD and Sole Broker to the Company.
· A strong brand identity and competitive position
o Founded in 2006, boohoo has grown rapidly, developing a brand identity and an international online proposition, and now has over 2.3 million active customers, with approximately 140,000 new customers registering on the website per month
o High fashion, high quality and low price products
o Limited number of direct competitors, focused on a similar age group and price point
· Agile supply chain facilitated by a unique 'Trial and Repeat' model
o Trends transferred from catwalk to closet in as little as six weeks
o Low stock cover of just seven to eight weeks
· A successful track record of revenue generation and profit growth
o For the ten months to December 2013, sales increased by 70% to £91.9m and adjusted EBITDA grew 188% to £10.1m (versus £54.1m and £3.5m respectively for the same period in the prior year)
o Exclusively own brand offering, generating gross margins of over 60 per cent
· A highly experienced management team
o Founded by Joint Chief Executives, Mahmud Kamani and Carol Kane, who together have a long history of supplying fashionable clothing, accessories and shoes to high street retailers
· Demonstrated international growth
o Currently operates an English language website for all sales in the UK and globally and a local French language website launched in October 2013
o 37% of sales were international for the ten months to December 2013, growing from £18m to £34m
· A compelling growth market
o The global apparel retail market has grown at an average annual growth rate of 2.8% per annum since 2008 and is expected to be worth £987 billion by 2017. Online retail sales are forecast to take 23.5% of total fashion retail sales by 2016 in the UK
o Expansion of the current product range, will allow boohoo to broaden its appeal, supported by engagement through interactive content and marketing
o The Directors believe that boohoo's exciting growth prospects are underpinned by forecast growth in both the domestic and international online fashion retail markets, the Company's highly efficient sourcing model and a robust infrastructure development plan
Commenting on the announcement, Mahmud Kamani, Joint Chief Executive of boohoo, said:
"We are delighted to announce that our initial public offering has been successful. The placing and Admission to AIM marks a significant step for boohoo as we invest in this exciting growth opportunity underpinned by the rapidly growing online retail market.
We would like to welcome our new shareholders to the Company and look forward to continuing to develop our business providing market leading customer service for on-trend, value led fashion clothing and accessories as a publicly quoted company."
Carol Kane, Joint Chief Executive of boohoo, said:
"boohoo is a lifestyle driven, online destination and the 'go to' for the latest fashion trends at affordable prices. We are confident that our competitive position and growing customer base means that we are well placed to capitalise on the fast growing online fashion retail market. Our success to date, coupled with our exciting expansion plans, makes this an ideal time to bring the Company to AIM."
Mahmud Kamani, Joint Chief Executive
Carol Kane, Joint Chief Executive
Neil Catto, Chief Financial Officer
c/o Buchanan +44 (0)20 7466 5000
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Details of the Transaction
· The Placing has raised approximately £300 million via the placing of 600 million new ordinary shares at a placing price of 50 pence per share ("the Placing Price").
· The Company's market capitalisation on Admission, based on the Placing Price, is expected to be approximately £560 million.
· The Placing saw strong demand from institutional investors.
· Each of the directors have agreed to customary lock-up arrangements in respect of their holding of ordinary shares for a specified period of time following Admission.
· After Admission, the Board will own approximately 30% and the non-Board members of the Kamani family approximately 14% of the Company.
· Immediately following completion of the Placing, it is expected that the Company will have a free float of approximately 55% of the issued share capital of boohoo.
· It is expected that dealings will commence on AIM at 8.00 a.m. on 14 March 2014. The ordinary shares will trade under the ticker "BOO" and the ISIN number is: JE00BG6L7297.
boohoo's products fall into four key collections which have different, yet complementary, design offerings and price points:
1. Main Range
Focused on a core audience of 16-24 year old young women and looking to provide the latest, on-trend fashions across a range of aspirational but value oriented products. The main range comprises the majority of the total range and has been developed to be both high fashion and low cost. Women's dresses make up the largest percentage of the range and a dress will typically be priced between £12-£25. The items in the main range are mostly exclusive to boohoo with the exception of new products which may be purchased on short "trial and repeat" runs.
2. Style Steals
This range is a fashion focused basics range with an entry price point of £3. A larger proportion of this range is not exclusive to boohoo as it is less important to differentiate this product offering.
boohoo's Boutique Collection was created as a higher priced, entirely exclusive range which extends the appeal of the boohoo brand to a wider range of customers, including to a slightly older age group with more disposable income. There are currently four ranges introduced each year with approximately 50 products in each release.
The boutique collection has generated significant PR and increased the aspirational image of the boohoo brand through its polished imagery. In the boutique collection, an average dress is priced around £34.
This range was introduced in mid-2013 in a bid to further extend the offering to men whilst keeping consistent with the principles of fast, value orientated fashion. boohooMAN products are priced between £5 and £50 and offers a mix of both the high fashion of the boohoo Main Range and the basic offering of Style Steals.
In February 2014 the first male only oriented marketing was launched, including TV and bill board adverts.
In addition to the above, Plus size dress (UK: 16 - 24) have been available on the site since early 2013, however, in early 2014 a Boohoo Plus range was formally launched in order to clearly distinguish the product on the site.
The core audience and price range for this offering remains the same as the core range with products designed to bring ultra-flattering, "fashion forward" pieces for sizes 16 to 24.
www.boohoo.com - the website
boohoo currently operates an English language website for all sales in the UK and globally and a local, French language website for sales into France and Belgium. The UK website enables international customers to purchase products in one of six currencies. Euros, US Dollars, Australian Dollars, Canadian Dollars, New Zealand Dollars and Pounds Sterling.
On average, hundreds of new products are added to the website per week. boohoo has its own, dedicated on-site photography and art studios employing a team of photographers, stylists, wardrobe and makeup artists, videographers and editors. All gallery photos (website still images) and catwalk videos are produced in-house. The speed and control that having its own studios provides is key to boohoo's strategy of being first to market with the latest, on-trend styles and fashions.
The growth of the business is driven by focussing on new customers, retaining existing customers, reactivating lapsed customers and driving order frequency, and boohoo has invested in a range of online and other marketing activities to promote this.
boohoo operates a multi-channel marketing strategy and utilises TV, outdoor press, digital and social media advertising to increase awareness of the boohoo brand and product offering. boohoo TV is available both on the boohoo.com website and YouTube, generating thousands of views. boohoo also publishes and distributes its own magazine - 'StyleFix' into six countries.
boohoo makes extensive use of social media sites including Facebook, Twitter, Instagram and Pinterest for advertising to and engaging with consumers. boohoo has nearly 2 million Facebook "likes", over 350,000 followers on Twitter and around 12,000 followers on Pinterest.
The Directors believe that the Company's ambition and growth prospects are underpinned by forecast growth in both the domestic and international online fashion retail markets, boohoo's highly efficient product sourcing model and a robust infrastructure development plan.
boohoo's strategy is built around the following four pillars of growth:
The number of new customers visiting boohoo has grown (both in the UK and globally) as awareness of the brand has increased and through the increase in online clothing and footwear retailing. The Directors believe that these factors will continue to drive growth, alongside boohoo's strategy to broaden the appeal of the brand, and increase the efficiency and individualisation of its marketing spend to drive additional customers to the website.
New international market opportunities have been prioritised based on a number of key criteria including market size, existing competitive environment, spending on fashion and delivery infrastructure. The short to medium term focus is continued growth within the USA, Central Europe and Scandinavia. In the medium term, boohoo plans to develop additional foreign language websites for a number of its overseas markets.
A number of specific customer retention programs are expected to be implemented to improve the customer experience and build increased brand loyalty. These include initiatives such as ensuring consistent product sizing, increased development of website functionality, growing the design team to increase the number of products unique to boohoo, and focusing on customer satisfaction.
Keeping it Real
The discipline of controlled growth has been promoted by the management team, with several initiatives designed to focus on maintaining a tight control on costs, whilst investing in people and systems to support the continuing growth of the business.
Reasons for Placing and Use of Proceeds:
· To raise the profile of the brand and further develop financing options
· Incentivisation of management team and wider employee base
· Realise value for incumbent shareholders whilst retaining significant shareholdings to benefit from future upside valuation
· Raise additional development capital in order to fund:
The Company has plans to extend the Burnley warehouse in the future, if sales continue to grow in line with expectations, which could provide additional warehouse space and additional picking slots. The estimated cost of the plans is approximately £6.5 million.
Repayment of Mortgage
A subsidiary of the Company has an outstanding mortgage of £2.5 million as at 31 December 2013 in connection with the Burnley warehouse. This will be repaid out of the proceeds of the Placing.
Infrastructure and IT
As boohoo grows, the increased number of transactions handled will require more robust and higher capacity IT systems as well as enhanced warehousing and distribution capabilities and systems. Appropriate levels of investment in this infrastructure will be essential to mitigate the risk of service outages, meet distribution requirements and keep customer satisfaction levels high, thereby driving repeat business. Additionally, as boohoo expands into new territories, additional foreign language websites will need to be launched, and these will require upfront investment to design and build.
The balance of funds raised and not used for the purposes outlined above will be used by the Company as additional working capital to support and implement the growth strategy.
Board of Directors:
Mahmud Kamani - Joint Chief Executive
Mahmud founded boohoo with Carol Kane in 2006, leveraging over 28 years of experience in the fashion industry. Mahmud's involvement in the fashion and apparel industry spans all areas of the supply chain from importer to wholesaler to retailer. Mahmud has sourced garments from all over the world. An entrepreneur with previous experience in fashion and clothing, Mahmud has developed a loyal team, some of whom have remained with him for 20 years.
Carol Kane - Joint Chief Executive
Carol has 25 years of experience in the fashion industry. Starting her career as a designer then fashion buyer, Carol has worked with Mahmud Kamani for the past 20 years supplying high street retailers. Carol cofounded boohoo in 2006 and since inception has worked on marketing, product and brand strategy both domestically and abroad.
Neil Catto - Chief Financial Officer
Neil qualified as a Chartered Accountant with Ernst & Young and spent nine years working in their
Manchester, Palo Alto and Reading offices. He was previously Finance Director of dabs.com plc and has held senior financial positions in BT plc and The Carphone Warehouse Group plc.
Petar Cvetkovic - Non-Executive Director
Petar is currently the CEO of DX Group Limited and is a non-executive director of Crawford Healthcare
Holdings Limited. He is the former MD of DFDS Logistics, Norbert Dentressangle in the UK and was latterly Chief Executive Officer of Target Express and MD of City Link.
During his 29 years in the logistics industry, Petar has worked in parcels, contract and shared-user distribution as well as supply chain and international logistics.
Peter Williams - Non-Executive Chairman
Peter was formerly the Senior Independent Director of ASOS plc and is currently the senior independent director of Sportech PLC and a non-executive director of both Rightmove plc and Cineworld Group plc. He is Chairman of both Mister Spex, an online retailer specialising in eyewear based in Berlin, and OfficeTeam, an office supplies business, and is a trustee of the Design Council. In the past, he has also served on the boards of the EMI group, Blacks Leisure Group plc, Silverstone, JJB Sports plc, GCap Media plc, and Capital Radio Group plc. In his executive career, he was Chief Executive at Alpha Group plc and prior to that Chief Executive of Selfridges plc where he also acted as Chief Financial Officer for over ten years. Mr Williams has a degree in Mathematics from Bristol University and is a chartered accountant.
David Malcolm Forbes - Non-Executive Director
David qualified as a chartered accountant in 1984 and has been a leading figure in Corporate Finance
advisory services for many years including 22 years in the Investment Banking division of N M Rothschild.
David's areas of expertise include mergers and acquisitions, corporate strategy and corporate finance involving both equity and debt. More recently David has served as a Non-Executive Director, and Chairman of the Remuneration Committee, at Vertu Motors plc and Renew Holdings plc.
Mark Newton-Jones - Non-Executive Director
Mark is the former CEO of Shop Direct Group, a position he held for almost ten years until July 2013. Under Mark's stewardship, Shop Direct embarked on one of the largest retail integrations in Europe, merging and integrating Littlewoods and Great Universal Stores, and a significant transformation journey from a failing large scale bricks-and-mortar operation, to one of the UK's leading multi-channel retailers with seamlessly integrated mobile, online and digital platforms. Mark led the launch of the successful online fashion brand, very.co.uk. Prior to Shop Direct Group, Mark spent 18 years with Next PLC, the last five of which he was responsible for Next Directory.
Stephen Morana - Non-Executive Director
Stephen is currently the Chief Financial Officer of Zoopla Property Group. He was formerly the Chief Financial Officer of Betfair Group PLC, one of the UK's most successful internet businesses where he also held the position of interim CEO. Prior to Betfair, Stephen held a number of senior finance positions, including at Sapient, the Nasdaq listed technology innovator. Stephen is a Chartered Accountant and an INSEAD alumnus.