TIDMITS

RNS Number : 5749G

In The Style Group PLC

27 July 2021

27 July 2021

In The Style Group plc

("In The Style", the "Company" or the "Group")

Annual Results for the 12 months ended 31 March 2021

Transformational year for In The Style

In The Style, the fast-growing digital womenswear fashion brand with an innovative influencer collaboration model, announces its results for the 12 months to 31 March 2021 (the "Period") following the Group's successful Admission to the London Stock Exchange's AIM on 15 March 2021 (the "Admission" or "IPO").

Financial Highlights:

 
                      31 March 2021   31 March 2020 
 Financial KPI's            GBP'000         GBP'000   Change 
-------------------  --------------  --------------  ------- 
 Revenue                     44,705          19,303    +132% 
 Gross Profit                20,589          10,234    +101% 
 Adjusted* EBITDA             3,799         (1,136) 
 Profit Before Tax 
  (PBT)                         125         (2,157) 
-------------------  --------------  --------------  ------- 
 Adjusted* PBT                2,471         (2,157) 
-------------------  --------------  --------------  ------- 
 Adjusted* EPS (p)            0.002         (0.001) 
-------------------  --------------  --------------  ------- 
 

*To provide comparability across reporting years, the results within this report are presented on an 'underlying' basis. In the current year, total Adjusting Items of GBP2.3m relate to costs associated with the Group's IPO as well as one-off bonuses awarded prior to the Group's IPO.

   --     Revenue increased 132% to GBP44.7 million (FY20: GBP19.3 million) 

o Direct-to-consumer revenue increased 108% to GBP36.4 million. (FY20: GBP17.5m)

o Wholesale revenue increased 353% to GBP8.3 million (FY20: GBP1.8 million).

-- Adjusted EBITDA increased to GBP3.8 million, ahead of expectations (FY20: loss of GBP1.1 million).

   --     Adjusted Profit Before Tax increased to GBP2.5 million (FY20: loss of GBP2.2 million). 

-- Successful IPO in March 2021 raising GBP11.0 million in gross proceeds from institutional investors to support the Group's long-term growth. As a result, at the Period end the Group had cash of GBP11.9 million (FY20: GBP2.0 million).

Operational highlights:

-- Increased frequency of new product collection launches, moving from a typical frequency of up to two collections per week in FY20 to consistently releasing between three and four new collections per week in FY21. This supported progress across several operational KPIs:

o Website visits increased 30% year on year;

o Conversion rate improved 62bps year on year;

o Average order value increased 10% year on year;

o Order frequency increased 16% year on year

   --     New customer acquisition grew 19% year on year 

o Excluding the customer acquisition impact of the well-supported Be Kind charity campaign that the Group first ran in February 2020, in the prior financial year, and repeated in February 2021, new customer acquisition increased 59% year on year.

-- Sales via the proprietary In The Style app increased significantly to represent 55% of total e-commerce sales during the Period (FY20: 19%).

-- More than GBP200,000 raised for the Samaritans, Family Action and Age UK charities through sales of popular ranges such as the 'Be Kind' collection and charity Christmas jumpers.

Post Period end highlights:

-- Nine new influencers have launched collections since the year end including the highly successfully new collaboration with TV personality and influencer Stacey Solomon with record sales generated from the initial collection launch.

-- New partnership launched with Asda to sell In The Style collections across more than 100 Asda stores.

Current trading and outlook:

-- Sales in the first quarter of the FY22 financial year are 44% ahead of the prior year, despite the strong 'lockdown' comparatives in FY21.

-- Both e-commerce and wholesale channels have performed strongly over the first quarter of the new financial year with several successful collection launches from the Group's existing influencers including the launch of the debut Stacey Solomon x In The Style collection.

-- Underpinned by its unique and dynamic model, relevant brand and broad customer appeal, In The Style is very well-positioned to continue its strong growth.

Adam Frisby, CEO and founder of In The Style, commented:

"FY21 was a transformational year for In The Style, during which we delivered outstanding growth and strategic progress while remaining true to our mission of empowering our customers to be brave, embrace body confidence and, most of all, love themselves for who they are.

Central to our success is our differentiated influencer collaboration model that creates a strong customer connection, drives highly efficient customer acquisition marketing metrics, and gives us exposure to a broad range of customers. We have maintained very positive trading momentum through the early part of FY22 despite the strong prior year comparatives and continue to progress well against our strategic objectives, driven in part by new initiatives including the exceptionally well received Stacey Solomon collaboration and our nationwide Asda partnership.

I'd like to take this opportunity to thank our partners, colleagues, and customers as well as both our old and new shareholders for their support of the In The Style brand. Following our successful IPO, I believe we are very well positioned to continue to build on our strong momentum and achieve our significant growth ambitions."

Enquiries

 
 In The Style Group plc 
  Jim Sharp, Non-Executive Chairman      Via Hudson Sandler 
  Adam Frisby, CEO 
  Paul Masters, CFO & COO 
 Liberum Capital Limited (Nomad 
  and Broker) 
  Clayton Bush 
  Scott Mathieson 
  Ed Thomas 
  Miquela Bezuidenhoudt                  +44 (0)20 3100 2000 
 Hudson Sandler 
  Alex Brennan                           +44 (0)20 7796 4133 
  Lucy Wollam                            inthestyle@hudsonsandler.com 
  Nick Moore 
 
 

Notes to Editors

In The Style is a fast-growing digital womenswear fashion brand with an innovative influencer collaboration model.

Founded in 2013 by entrepreneur Adam Frisby, the brand champions female empowerment, inclusivity, body positivity and real beauty.

The brand's innovative and highly adaptable influencer collaboration model, which sees it work with influencers on a long-term basis to collaboratively design, develop and promote branded collections, differentiates it from competitors.

In The Style currently partners with a stable of 15 influencers, including Stacey Solomon, Dani Dyer, Jacqueline Jossa and Billie Faiers. Together they enjoy a combined global social media reach of almost 30m followers.

Chairman's Statement

INTRODUCTION

It is with great pleasure that I welcome our new shareholders within this, In The Style's maiden Annual Results as a public company. We were delighted with the positive reception to the Company's IPO on the London Stock Exchange's AIM in March from such a range of high-quality investors, which is a great testament to In The Style's differentiated brand, attractive and highly relevant business model and the many exciting growth opportunities that lie ahead.

FY21 PERFORMANCE OVERVIEW

FY21 was a step change year for In The Style as the business continued to accelerate its growth.

Group revenue for the 12 months to 31 March 2021 was GBP44.7m, an increase of 132% compared to the prior year. Adjusted EBITDA, a non-GAAP metric used by the Board to provide a meaningful analysis of trading results, increased to GBP3.8m (FY20: loss of GBP1.1m). Reported Operating Profit after Adjusting items increased to GBP0.5m (FY20: loss of GBP1.8m) and the group made a Profit after Tax of GBP0.6m (FY'20: loss of GBP2.2m). The Adjusting items are detailed in note 6 and note 30 to the financial statements. This impressive performance was underpinned by a growing customer base attracted by the In The Style brand and its relevant values, the strength of the Group's differentiated influencer collaboration model and the continued structural shift towards e-commerce in the clothing market. The Financial Review section provides a more in-depth analysis of the Group's financial results.

ENVIRONMENT, SOCIAL AND GOVERNANCE (ESG)

In The Style was created with inclusivity and kindness at its core, and we recognise the brand's responsibility to impact our customers, colleagues, communities and the environment positively.

During what was undoubtedly a challenging year for our customers and communities as a result of the Covid-19 pandemic, the business demonstrated its values by undertaking a number of initiatives to support its customers and the wider community. This included raising more than GBP200,000 for charitable organisations including Samaritans, Family Action and Age UK through the sale of special clothing collections such as the hugely successful Be Kind campaign.

The Board is committed to operating an ethical business and maintaining a programme of continual improvement across all aspects of corporate social responsibility ("CSR") in line with its position as a leading operator within the industry. Monitoring progress against the Group's CSR objectives is spearheaded by CEO Adam Frisby and CFO/COO Paul Masters, with updates regularly communicated to and scrutinised by the Board of Directors.

At In The Style we believe that every worker in our supply chain should be respected, work in good and safe working conditions and receive a fair wage. While we do not own any of the factories making our products, we know it is our responsibility to work with our suppliers to ensure all products manufactured for our brand are done so in a safe and ethical way, respecting universal human rights. To help ensure this, In The Style works with a tight base of suppliers that are required to sign up to the Group's strict Code of Conduct and there is a programme of visits in place by In The Style's team, in line with industry best practice. In addition, prior to the Company's IPO, the Board commissioned Anthesis, a leading sustainability consultancy, to conduct an independent assessment of the Group's CSR and sustainability programme including a comprehensive programme to audit the Group's supply chain. The findings and recommended actions have been integrated into the Group's CSR roadmap.

The Board recognises the importance in upholding high standards of corporate governance for the benefit of all stakeholders. Having adopted the QCA Corporate Governance Code at IPO, this will underpin the Group's ongoing commitment to transparency and integrity during the next phase of its journey as a public company.

BOARD OF DIRECTORS

In The Style is led by a talented and ambitious senior team. The Group was delighted to strengthen its Board of Directors with the appointments of two skilled Independent Non-Executive Directors at the IPO, Adam Bellamy and Nancy Cruickshank.

Adam is a highly experienced financial professional, having held senior financial roles at D&D London, Pure Gym and Atmosphere Bars & Clubs, and non-executive roles at Loungers and Ten Entertainment Group. Nancy brings huge experience in data, technology, and digital businesses, garnered from her career as a serial tech entrepreneur and most recent role as an Executive Director at Carlsberg Group leading on its Digital Business Transformation programme, as well as her non-executive roles at Allegro, Bango and Flutter.

I would like to thank both Nancy and Adam for their insight and the valuable contribution they have already made since joining the Group, and look forward to working with them closely over the coming years.

OUTLOOK

We are pleased to report a strong maiden performance during what was undoubtedly a year of unprecedented change and significant macroeconomic volatility. The Group achieved growth across all channels, delivered excellent progress against its strategy and reinforced its foundation for sustainable growth. This performance is testament to the empowering values and strong ethos that form the core of the In The Style brand, and their continued relevance and resonance amongst our core customer demographic.

Since the year end, In The Style has continued to deliver excellent strategic progress including the very successful launch of the debut collection of influencer, author and presenter Stacey Solomon, whose social media following on Instagram totals more than 4.5m, and the launch of In The Style's retail partnership with ASDA, which has seen the brand featured within more than 100 stores nationwide.

Sales in the first quarter of the FY22 financial year are 44% ahead of the prior year, which is especially pleasing given the strong 'lockdown period' comparatives in the prior year. Both e-commerce and wholesale channels have performed strongly over the first quarter of the new financial year with several successful collection launches from the Group's existing influencers, including the launch of the debut Stacey Solomon x In The Style collection.

While uncertainty remains regarding the economy, easing of social restrictions and the long-term implications of these on consumer behaviour, we remain confident that, underpinned by its unique and dynamic model, relevant brand and broad customer appeal, In The Style is very well-positioned to continue its growth and create value for all of its stakeholders.

Jim Sharp

Non-Executive Chairman

Chief Executive's Strategic Review

I am very pleased to present In The Style's first Strategic Review following the Group's successful IPO in March 2021. We welcome our new shareholders to the business and are pleased to report that the Group continued to deliver against its growth priorities during the year whilst staying true to the brand's clear mission and values.

An authentic, campaigning brand with a differentiated influencer collaboration approach

In The Style is a fast-growing, digital womenswear fashion brand that sells on-trend and affordable clothing and accessories. In The Style is an inclusive brand, for every kind of woman regardless of her shape or size. We champion female empowerment, body confidence and real beauty, with each of these values central to our approaches to brand marketing and product sizing.

In The Style takes an approach to celebrity and social media influencer collaborations which is differentiated from many other fashion brands. Rather than simply paying celebrities and social media influencers to wear and promote our clothes, we work closely with these partners to design, develop, and launch eponymous clothing collections. The influencers we work with enjoy royalty payments based on the profit generated by their collections, thereby incentivising them to actively promote sales, in turn driving efficient marketing for the Group.

The Group currently works with more than 15 influencers who collectively have a combined social media reach of more than 30m. This gives the In The Style brand broad exposure to a wide range of highly engaged customers. When appraising potential collaborators, the Group considers a number of aspects including the social media influencer's embodiment of the Group's brand values, and their resonance with the In The Style customer base.

In The Style's products are design-led rather than price-led and approximately 85% of products are designed by our in-house teams. We work closely with each influencer to curate product ranges based on our understanding of the In The Style customer, the influencer's appeal to specific segments of our customer base, and seasonal trends. The time from design to going on sale is typically between eight and ten weeks. In the run up to launch, both In The Style and its influencer partners build customer anticipation by sharing teasers and conducting Q&As across social media channels.

Product collections are launched on In The Style's proprietary app one hour prior to being available on our e-commerce website. This prompts app downloads which, in turn, provides important customer data and insight. Due to the preceding promotional activity, each campaign typically performs very strongly immediately following launch. This provides the Group with immediate visibility on most popular products and informs any subsequent restock.

Focused on building our business responsibly

Our corporate social responsibility (CSR) programme is based on the desire to operate our business transparently, responsibly and inclusively. As a brand we are continuously challenging ourselves to have a positive social impact on all our stakeholders.

We recognise our responsibility to reduce the environmental impact of our products. Our online business model allows us to minimise unsold inventory, as we can trial products by ordering smaller quantities, only repeating orders where they sell well. Although we offer quick reaction, trend-led styles at affordable prices, we do not see our clothes as disposable. We want our customers to get the best out of our products and maximise their lifecycle. We encourage our customers to look after our clothes, swap or recycle them. Through our partnership with ReGAIN we are aiming to change our customers' attitude towards unwanted clothes. Through this partnership, customers are financially incentivised to contribute to circular fashion by diverting clothes from landfill and donating them to charity. We are also continuously looking at more ways to incorporate more responsible materials into our collections. Our first recycled collection launched in January 2021. This range of knitwear was made using 100% recycled polyester yarns. We will be looking to trial more responsible materials during the rest of 2021.

In The Style is also acutely aware of the responsibility the Group has for ensuring that the products it sells are manufactured by an ethical supply chain. We are committed to partnering with expert organisations, industry groups and other brands to understand our supply chain risks and to continually improve standards and working conditions. During the year we provided Ethical Trading training to all relevant employees and progressed a process to map all Tier-1 suppliers. We also continued to partner with The Reassurance Network, an international team of specialists who work closely with clients to build more sustainable supply chains, Fast Forward, a next generation labour standard audit and improvement programme to build resilient supply chains, and commissioned an independent supply chain audit by Anthesis, a leading sustainability consultancy, the findings of which have been integrated into the Group's CSR roadmap.

Business model

The Group operates two key channels to market. The first is its direct-to-consumer e-commerce channel, which comprises sales through our fully responsive website (www.inthestyle.com) and proprietary app.

Launched in 2019, the app has been a key driver of the Group's increased customer acquisition, engagement, retention, and purchase frequency over recent periods. During FY21 direct-to-consumer e-commerce sales represented 81% of total Group sales, with 55% of direct-to-consumer e-commerce sales generated through the app.

The Group's second channel to market is through its increasing number of wholesale partnerships. These include digital platforms such as Lipsy, ASOS, Shop Direct, Studio and, since the year end, ASDA. During the year, this channel represented 19% of total sales.

In The Style's growth strategy

The Group has a clear growth strategy for the long-term, sustainable development of In The Style as a leading digital brand in the large and growing international female apparel market.

This strategy is built on the following pillars:

   --     Increasing our scale and reach through the expansion of our innovative influencer model; 

-- Increasing our investment in brand marketing and growing our relationships with selected digital partners;

-- Continuing to build the In The Style brand by campaigning on issues that are important to us and our customers; and

-- Pursuing other selected growth opportunities including international expansion, extension of own brand sales, branching out into new product categories and potential acquisitions.

In order to deliver this strategy, we will:

-- Invest in our people to support the business's growth in existing and new markets, categories and channels;

-- Develop and leverage our infrastructure and technology to improve customer service, retention and conversion;

-- Continue to innovate and leverage the In The Style social media platform by capitalising on the underlying growth in social media users and engagement, scaling our social media; collaboration model, and expanding In The Style's social media reach to benefit organic marketing; and

-- Continue to focus on building our business responsibly and in the interests of all stakeholders.

FY21 Business Review

FY21 was a transformational year for In The Style. Alongside the Group's IPO on the London Stock Exchange in March 2021, the year was marked by significant progress against the Group's strategy to develop as a leading women's fashion brand.

During the year, In The Style worked with a range of influencers to launch product collections covering an increased range of product categories and targeted at a growing range of customer demographics. The frequency of new product collection launches increased significantly representing an average of three to four per week, an increase from the one to two launches a week in the prior year.

A dynamic and diverse product offering

Following the onset of the Covid-19 pandemic in March 2020, the Group demonstrated its agility by quickly diversifying its product offering to better reflect the needs of its customers. This meant pivoting away from occasionwear categories and increasing the availability of more casual categories such as loungewear.

We also successfully expanded into new categories such as activewear, which was developed and launched in collaboration with fitness influencer and personal trainer Courtney Black, and unveiled our first maternity wear collection with existing brand partner and influencer Dani Dyer. In The Style has since capitalised further on customer demand for this category through the launch of maternity collections with reality TV star Georgia Kousoulou, actress Brooke Vincent, and influencer Elle Darby.

Another notable highlight in the brand's category expansion was its first foray into nightwear through the launch of a 'his and hers' Christmas pyjama collection created in collaboration with Olivia Bowen. For the first time in the Company's history, this collection included men's products and the positive customer reception provides useful insights for potential similar collections in the future.

Following the year end, In The Style has continued to develop its product proposition, launching a first swimwear collection with long-time partner Jacqueline Jossa and announcing one of its largest ever partnerships with author, influencer and presenter Stacey Solomon. The Stacey Solomon x In The Style collection launched in April 2021 and represents the brand's most successful collaboration launch to date.

Corporate Social Responsibility ("CSR")

In The Style is committed to operating responsibly, transparently and sustainably and during the year the Group created a new business-wide CSR Committee. Reporting to the Board of Directors and led by me and CFO/COO Paul Masters, this committee will drive the Group's progress against its sustainability agenda.

The brand encourages customers to be kind to themselves and to each other. In The Style leads by example and we are immensely proud to have supported a number of causes that are close to the hearts of our customers and the wider community during the year. This included raising more than GBP200,000 for our charity partners, Samaritans, Family Action and Age UK, through the launch of specific product collections, most notably the second iteration of our hugely successful Be Kind campaign and the influencer designed Christmas jumper initiative.

Increased customer acquisition & engagement

New customer acquisition increased 19% year on year, representing a total of 420,000 new customers in the year.

The Group's primary customer acquisition channel is influencer marketing through both its partners' social media channels and its own. In The Style's social media reach on its main Instagram channel grew by 0.7m during the year to 3m. The risk and reward profit share model continues to drive a low cost of customer acquisition.

Route to market - direct to consumer

Sales through the Group's core direct to consumer channel, which includes the proprietary app as well as the inthestyle.com e-commerce website, increased significantly by 108% to GBP36.4m.

The Group achieved strong increases across its KPIs including website traffic, customer conversion, app downloads and average order value reflecting the ongoing investments and enhancements made to the customer experience and journey on our website as well as the continued growth in popularity of the In The Style app.

In The Style's proprietary app continued to go from strength to strength during the year. Sales through the app grew more than 400% to represent 55% of total e-commerce sales. Post the year end, we were delighted by the success of the launch of Stacey Solomon's debut eponymous In The Style collection which resulted in our app reaching the top of the download charts on Apple's app store.

Route to market - digital retail partners & wholesale

Sales through In The Style's wholesale partners grew more than 350% to GBP8.3m. The Group's partnerships, including Lipsy, Shop Direct and ASOS, continue to support brand awareness and offer customers increased opportunities to shop our collections and engage with our brand. We continue to see significant opportunities for expanding this channel both in the UK and internationally to support the continued growth of the In The Style brand.

Following the year end, the Group announced and launched an exciting partnership with ASDA, one of the UK's largest retailers, to stock In The Style's collections online and in more than 100 ASDA stores nationwide. We are very excited by this partnership which will increase exposure for the brand, particularly amongst mums, which is one of our core customer demographics.

New markets

While In The Style currently ships to more than 100 countries, during the year only 5% of the Group's sales were in international markets. The Board believes there is the potential to grow this significantly over the medium term.

Growth in targeted international markets will be approached through replication of the Group's proven influencer collaboration model, working with local partners in markets where social media and e-commerce demonstrate favourable growth dynamics. Similarly, international routes to market will build on the brand's success in the UK through utilising the successful In The Style app alongside carefully selected local wholesale partnerships.

Investing in our platform for long-term growth

The success achieved by the Group during the year was underpinned by the investments made in developing its proprietary technology and infrastructure over recent years.

This investment included migrating the business's current infrastructure from a legacy single application platform to micro services to enable more efficient tech upgrades and to drive commercial performance through improved functionality and reliability; demonstrated post year end with the scaling achieved to manage the record debut Stacey Solomon launch.

The Group has developed a well-defined roadmap for future technology upgrades to stay at the forefront of customer experience, functionality and to provide the potential for future scalability. During the coming year this will comprise the migration of final legacy components of the Group's previous platform, accelerated development of the In The Style app for international and regional purposes, and the improvement of search functionality.

Since the year end, we are in the process of negotiating a lease on a separate office. This move will allow the existing site to be completely turned over to warehousing to provide capacity while the Group searches for a larger combined facility.

People and talent

The investment in infrastructure made during the year was complemented by the strengthening of In The Style's senior team. This included senior appointments across marketing, CSR and technology, including the hiring of John Allen to the newly created position of Chief Digital and Technology Officer.

FY21 has been a transformational year for the Group and I would like to take the opportunity to wholeheartedly thank everyone across the business as well as our influencer partners for their continued commitment and support. Following this milestone year, I look forward to working with our stakeholders over the coming 12 months to maintain this exciting momentum and drive the business further towards achieving its significant potential.

Adam Frisby

Founder and Chief Executive Officer

Financial Review

 
                      31 March 2021   31 March 2020 
 Financial KPI's            GBP'000         GBP'000    Change 
-------------------  --------------  --------------  -------- 
 Revenue                     44,705          19,303     +132% 
 Gross Profit                20,589          10,234     +101% 
 Gross Margin                 46.1%           53.0%   -696bps 
  Operating Profit              519         (1,812) 
 Adjusted EBITDA              3,799         (1,136) 
-------------------  --------------  --------------  -------- 
 

Year on Year Performance

Basis of preparation

The basis of preparation of the financial statements can be found in note 1. To provide comparability across reporting years, the results within this Financial Review are presented on an 'underlying' basis. In the current year, total Adjusting Items of GBP2.3m relate to costs associated with the business's Admission to the London Stock Exchange's AIM on 15 March 2021 (the "IPO") as well as one-off bonuses, details can be found in note 4.

Group Overview

While FY21 was a transformative year for In The Style, the beginning of the financial year coincided with the introduction of government-imposed restrictions following the onset of Covid-19. As with many businesses there was significant trading uncertainty at that time, employees were instructed to work from home where possible and the business made the decision to take advantage of government support offered through placing a number of employees on furlough and the VAT deferral scheme. All furlough monies received (GBP0.2m) and VAT deferred (GBP0.6m) were repaid prior to the year end.

During this unprecedented time the business was very quick to maintain relevance by pivoting its product offering to more casual clothing collections, in line with consumer demand. The trading rhythm of the business was also changed in early 2020 as the Group significantly increased the frequency of new product collection launches, moving from a typical frequency of up to two collections per week to consistently releasing between three and four new collections per week. This approach increased newness and interest for In The Style customers and helped to increase levels of new customers and repeat order frequency.

Ensuring relevance through a change in product strategy and the increased frequency of launches meant that In The Style was well placed to benefit from the accelerated shift to on-line shopping over the year, this rapid change and successful execution of strategy gave rise to specific management and wider employee bonuses which are included in the Adjusting items noted below.

Revenue for the year increased by 132% to GBP44.7m (FY20: GBP19.3m), reflecting strong performances across both direct-to-consumer and wholesale sales channels.

Adjusted EBITDA, a non-GAAP metric used by the Board to provide a meaningful analysis of trading results, increased to GBP3.8m (FY20: loss of GBP1.1m). Reported Operating Profit after Adjusting items increased to GBP0.5m (FY20: loss of GBP1.8m).

The final quarter of the year saw the Group's successful IPO, raising gross proceeds of GBP11.0m to help fund the continued growth of the business. Cash at the year-end amounted to GBP11.9m (FY20: GBP2.0m), with the most significant proportion of this relating to the funds raised at the IPO.

Revenue

Revenue across the Group's direct-to-consumer e-commerce channel (comprising sales through the Group's e-commerce website and proprietary app) performed extremely well, increasing 108% to GBP36.4m. Headline sales growth was supported by increases in all of the main e-commerce KPIs including: Traffic (+30%); Conversion (+27%); and Average Order Value ("AOV") (+10%).

 
 Operational KPI's    31 March 2021   31 March 2020   Change 
-------------------  --------------  --------------  ------- 
 Visits                       46.4m           35.7m     +30% 
 Conversion rate              2.89%           2.27%    62bps 
 AOV                       GBP42.85        GBP39.01     +10% 
 Order Frequency               1.76            1.52     +16% 
-------------------  --------------  --------------  ------- 
 

Significant progress was made during the year in acquiring new customers. 420,000 customers transacted with the In The Style brand for the first time, an increase of 19% on the prior year. When stripping out the very positive customer acquisition impacts of the exceptionally well-supported Be Kind charity campaign that the Group first ran in February 2020, in the prior financial year, and repeated in February 2021, new customer acquisition increased 59% year on year.

The increased frequency of new product launches and the continued investment in customer relationship management ("CRM") activity has ensured that alongside the growth in customer acquisition, order frequency has also increased.

The In The Style proprietary app continued to go from strength to strength during the year with 900,000 app downloads. As a result, sales through the app increased to represent 55% of total e-commerce sales (FY20: 19%). Alongside significant conversion rate benefits, the app provides a fantastic platform to communicate with our most engaged customer group.

Wholesale sales to third-party retailers is an important element of the In The Style growth strategy. The brand's presence on high profile digital retail platforms such as ASOS, Shop Direct and Lipsy provides a profitable revenue stream and access to a broader customer base, thereby increasing brand awareness. Revenue from this channel increased by 353% to GBP8.3m (FY20: GBP1.8m). Following the year end, we were pleased to launch an e-commerce and retail partnership with ASDA, which the Board believes will help to further increase brand awareness and customer acquisition.

Gross Margin

Gross Margin reduced 696bps compared to the prior year, impacted by increased freight costs year on year as a result of the Covid-19 pandemic (c.300 bps), a change in the product mix towards more casual clothing during the lockdown periods (c.300bps) and a higher proportion of wholesale sales (c.100bps).

E-commerce Gross Margin during the year decreased 620bps to 52.2% (FY20: 58.4%), also impacted by increases in freight charges and consumer demand for more casual products during lockdown periods.

Wholesale Gross Margins significantly improved year on year to 19.1% (FY20: 1.6%), reflecting an increased mix of full price sales. Whilst wholesale Gross Margins are lower than those of direct-to-consumer e-commerce sales, management and fulfilment of wholesale channel orders leverages much of the existing In The Style team and infrastructure.

Operating Costs

Total Operating Costs including Adjusting items increased 66% year on year to GBP20.3m. Underlying costs excluding Adjusting items increased to GBP18.0m (FY20: GBP12.3m). This represents a significant reduction as a percentage of Revenue from 64% in the prior year to 40%.

Distribution costs increased to GBP7.4m (FY20: GBP4.2m). This was due to the increased volume of product sold during the year. This was in part offset by warehouse efficiencies and lower costs associated with the distribution of wholesale orders.

Underlying Administration costs excluding Adjusting items increased to GBP10.6m (FY20: GBP8.1m). Within this, marketing costs increased by GBP1.8m on the prior year which was predominantly attributable to sales commissions reflecting the increased number of influencer range launches, which in turn drove the Group's strong revenue growth. Sales commissions are an influencer marketing expense and are therefore included within Administration costs. Other Administration costs increased by just GBP0.6m, benefitting from efficiency improvements and the leveraging of the existing infrastructure that the Group invested in and developed ahead of the growth curve.

Non-recurring costs (Adjusting items)

During the year, the Group incurred costs relating to the Group's IPO as well as one-off bonuses. The Board consider these costs to be material and non-recurring in nature and a breakdown of these costs are provided in note 6 to the financial statements.

Finance costs

Finance costs of GBP0.4m were incurred during the year. This predominantly relates to interest on Preference Shares that were converted to ordinary shares at the IPO.

Taxation

There is no tax due for the financial year due to utilisation of historic tax losses incurred. A deferred tax asset of GBP0.5m has been recognised at the year-end reflecting managements view on expected utilisation of historic tax losses over the coming year.

Balance Sheet

Net assets increased to GBP11.2m at the year end versus net liabilities of GBP2.7m at the prior year end. Inventories increased by GBP1.1m to GBP2.0m and Trade and other receivables increased by GBP0.8m to GBP1.7m, both balances reflecting the growth in the business.

Gross proceeds of GBP11.0m were raised at the IPO and borrowings of GBP3.1m at the prior year end, which reflected the outstanding Preference share balance under the previous capital structure, were re-designated as Ordinary shares in the capital re-organisation prior to the IPO.

Cashflow and cash position

Net cash at the year end amounted to GBP11.9m (FY20: GBP2.0m). The largest inflow of cash in the year related to the Company's IPO, which raised gross proceeds of GBP11.0m of growth capital for the business.

Net cashflow from operating activities was GBP1.1m (FY20: outflow of GBP0.7m), the variance being almost wholly due to the increase in profitability. A small increase in working capital of GBP0.3m arose in the year with increased inventory levels of GBP1.1m and debtors of GBP0.8m being offset by increases in payables of GBP1.6m.

Investment in technology and infrastructure continued with GBP0.4m of capital spend. Dividends of GBP1.25m were paid to shareholders during the year.

Paul Masters

Chief Financial Officer and Chief Operating Officer

directors Responsibility Statement

The responsibility statement has been prepared in connection with the Company's full Annual Report and Accounts (the Annual Report') for the year ended 31 March 2021. Certain parts of the Annual Report are not included in this announcement, as described in note 1.

We confirm that to the best of our knowledge:

-- the Group financial statements have been prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006, subject to any material departures disclosed and explained in the financial statements, and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group.

-- the Annual Report includes a fair review of the development and performance of the business and the position of the Group and the Parent Company, together with a description of the principal risks and uncertainties that they face.

-- the Annual Report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's performance, business model and strategy.

By order of the Board

Paul Masters

Chief Financial Officer and Chief Operating Officer

Group statement of total comprehensive income

For the year ended 31 March 2021

 
                                           Year Ended   Year Ended 
                                             31 March     31 March 
                                                 2021         2020 
                                              GBP'000      GBP'000 
 
 Revenue                                       44,705       19,303 
 Cost of sales                               (24,116)      (9,069) 
                                          -----------  ----------- 
 Gross profit                                  20,589       10,234 
 
 Distribution costs                           (7,428)      (4,189) 
 Administration expenses                     (12,919)      (8,081) 
 Other operating income                           277          224 
                                          -----------  ----------- 
 Operating profit/(loss)                          519      (1,812) 
 
 Adjusted EBITDA(1)                             3,799      (1,136) 
 Depreciation                                   (360)        (272) 
 Amortisation                                   (574)        (404) 
 Adjusting items                              (2,346)            - 
 
 Operating profit/(loss)                          519      (1,812) 
 
 Finance income                                     1            3 
 Finance costs                                  (395)        (348) 
                                          -----------  ----------- 
 Profit/(loss) before taxation                    125      (2,157) 
 
 Income tax                                       500            - 
                                          -----------  ----------- 
 Profit/(loss) and total comprehensive 
  income/(loss) for the year                      625      (2,157) 
 
 Profit/(loss) per share - 
  basic and diluted                                 -            - 
                                          -----------  ----------- 
 

Note 1: Adjusted EBITDA, which is defined as profit before net finance costs, tax, depreciation, amortisation and adjusting items, is a non-GAAP metric used by management and is not an IFRS disclosure. Adjusting items are items which are material and non-recurring in nature as disclosed in note 4. Adjusted EBITDA is consistent with the way financial performance is measured by management and reported to the Board and assists in providing a meaningful analysis of trading results.

All results derive from continuing operations.

Profit/(loss) and total comprehensive profit/(loss) is attributable to equity holders of the Company.

Group statement of financial position

As at 31 March 2021

 
                                        As at       As at 
                                     31 March    31 March 
                                         2021        2020 
                                      GBP'000     GBP'000 
 Non-current assets 
 Intangible assets                      1,125       1,374 
 Property, plant and equipment            272         303 
 Right of use assets                      292         303 
 Deferred tax asset                       500           - 
 Total non-current assets               2,189       1,980 
                                   ----------  ---------- 
 
 Current assets 
 Inventories                            1,955         852 
 Trade and other receivables            1,746         920 
 Cash and cash equivalents             11,939       2,047 
                                   ----------  ---------- 
 Total current assets                  15,640       3,819 
                                   ----------  ---------- 
 Total assets                          17,829       5,799 
                                   ----------  ---------- 
 
 Liabilities 
 
 Current liabilities 
 Lease liability                          164         137 
 Trade and other payables               6,201       5,018 
 Total current liabilities              6,365       5,155 
                                   ----------  ---------- 
 
 Non-current liabilities 
 Borrowings                                 -       3,098 
 Lease liability                          281         223 
 Total non-current liabilities            281       3,321 
                                   ----------  ---------- 
 Total liabilities                      6,646       8,476 
 Net assets/(liabilities)              11,183     (2,677) 
                                   ==========  ========== 
 
 Equity 
 Share capital                            131          15 
 Share premium                         10,942       4,914 
 Merger reserve                          (58)           - 
 Retained earnings/(accumulated 
  losses)                                 168     (7,606) 
 Total equity/(deficit)                11,183     (2,677) 
                                   ==========  ========== 
 

Group statement of changes in equity

For the year ended 31 March 2021

 
                             Share Capital   Share Premium   Merger reserve          Retained               Total 
                                                                                     earnings    (deficit)/equity 
                                                                               / (accumulated 
                                                                                      losses) 
                                   GBP'000         GBP'000          GBP'000           GBP'000             GBP'000 
                                                                                       (5,449 
 As at 1 April 2019                     15           4,914                -                 )               (520) 
                            --------------  --------------  ---------------  ----------------  ------------------ 
 
 Loss for the year                       -               -                -           (2,157)             (2,157) 
 Total comprehensive 
  loss for the year                      -               -                -           (2,157)             (2,157) 
                            --------------  --------------  ---------------  ----------------  ------------------ 
 
 As at 31 March 2020                    15           4,914                -           (7,606)             (2,677) 
                            --------------  --------------  ---------------  ----------------  ------------------ 
 
 Profit for the year                     -               -                -               625                 625 
 Total comprehensive 
  income for the year                    -               -                -               625                 625 
                            --------------  --------------  ---------------  ----------------  ------------------ 
 
 Transactions with 
  shareholders: 
 Dividend                                -               -                -           (1,250)             (1,250) 
 Share reorganisation 
  - preference share 
  redesignation as equity 
  and cancellation of 
  share premium                          -               -                -             3,470               3,470 
 Share capital reduction              (15)         (4,914)                -             4,929                   - 
 Issued on incorporation                59               -                -                 -                  59 
 Group reorganisation                   58               -             (58)                 -                   - 
 Share issue on IPO                     14          10,986                -                 -              11,000 
 IPO costs                               -            (44)                -                 -                (44) 
                            --------------  --------------  ---------------  ----------------  ------------------ 
 Total transactions 
  with shareholders                    116           6,028             (58)             7,149              13,235 
                            --------------  --------------  ---------------  ----------------  ------------------ 
 As at 31 March 2021                   131          10,942             (58)               168              11,183 
                            --------------  --------------  ---------------  ----------------  ------------------ 
 

Group cash flow statement

For the year ended 31 March 2021

 
                                             Year Ended   Year Ended 
                                               31 March     31 March 
                                                   2021         2020 
                                                GBP'000      GBP'000 
 Net cash flow from operating activities 
 Profit/(loss) for the year                         625      (2,157) 
 
   Adjustments for: 
 Amortisation of intangible assets                  574          404 
 Depreciation of property, plant 
  and equipment                                     360          272 
 Loss on disposal of property, 
  plant and equipment                                 -          (1) 
 Finance income                                     (1)          (3) 
 Finance costs                                      395          348 
 Income tax expense                               (500)            - 
 
   Working capital adjustments 
 (Increase)/decrease in inventories             (1,103)          111 
 Increase in trade and other receivables          (771)        (611) 
 Increase in trade and other payables             1,550          948 
 Taxation paid                                        -            - 
                                            -----------  ----------- 
 Net cash from/(used in) operations               1,129        (689) 
                                            -----------  ----------- 
 
   Cash flows generated from/(used 
   in) investing activities 
 Purchase of intangible assets                    (325)        (616) 
 Purchase of property, plant and 
  equipment                                        (89)         (65) 
 Proceeds from sale of property, 
  plant and equipment                                 -            1 
 Interest received                                    1            3 
 Net cash generated from/(used 
  in) investing activities                        (413)        (677) 
                                            -----------  ----------- 
 
   Cash flows from financing activities 
 Issue of ordinary shares                        11,000            - 
 Costs incurred on IPO charged 
  to Share Premium                                 (44)            - 
 (Repayment of)/receipt from invoice 
  discounting facility                            (365)          312 
 Dividend paid                                  (1,250)            - 
 Interest paid on lease liabilities                (19)         (16) 
 Repayment of lease liabilities                   (146)        (132) 
                                            -----------  ----------- 
 Net cash from financing activities               9,176          164 
                                            -----------  ----------- 
 
 Net increase/(decrease) in cash 
  and cash equivalents                            9,892      (1,202) 
 Cash and cash equivalents brought 
  forward                                         2,047        3,249 
 
 Cash and cash equivalents carried 
  forward                                        11,939        2,047 
                                            ===========  =========== 
 

Notes

   1.    Basis of Preparation 

The preliminary financial information does not constitute statutory accounts for the financial years ended 31 March 2021 and 31 March 2020 but has been derived from those accounts.

Statutory accounts for the financial year ended 31 March 2021 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts and their report was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

   2.    Going concern 

Management have assessed the likely impact of coronavirus on the Group based on the latest available financial and non-financial information and government guidance. This assessment has looked at the likely duration of the crisis as well as the sales that could be expected to be generated through each channel during an extended lockdown period, both at a national and local level.

The business has not experienced any significant disruption from employee absence, supply chain or distribution networks and none is anticipated for the foreseeable future.

During this period of uncertainty, the Directors have taken steps to mitigate the effect of coronavirus. Focus has been on adapting to change in consumer demand, cost reduction and efficiency, working capital reduction and staff retention. The Government has demonstrated its commitment to the economy and the Group has taken advantage of Government support available, namely the furlough scheme and deferrals of VAT payments. All amounts received under the furlough scheme and VAT deferral scheme were repaid in full by the year end.

At the current time, the Group is trading well against forecasts driven by the growth in its online market share. Whilst an element of uncertainty remains around the future effect of the COVID-19, the period of strong trading since the outset of the pandemic and the Group's ability to quickly react to changing consumer demands means the Directors do not consider the COVID-19 pandemic to be a significant future risk to trading performance. Stress testing has been conducted and considered, taking into account the potential economic impact on consumers in the long term.

The working capital impact of an increasing wholesale element of the business has been mitigated to a large degree by an invoice discounting facility. This facility runs through to November 2021 and at that point the directors will determine whether to extend the facility or not based on future requirements. Based on current cash projections, the Group does not require this facility to operate as a going concern.

   3.    Segmental analysis 

The Chief Operating Decision Maker ("CODM") has been identified as the Board of Directors. The Board reviews internal reporting in order to assess performance and allocate resources. The Board has determined that there are two operating segments, being wholesale and e-commerce clothing retailing.

In view of the growth in wholesale revenue in the year ended 31 March 2021, the CODM are now monitoring the two operating segments separately.

 
                                   Revenue                           Gross Profit 
                         Year Ended        Year Ended        Year Ended        Year Ended 
                           31 March          31 March          31 March          31 March 
                               2021              2020              2021              2020 
                            GBP'000           GBP'000           GBP'000           GBP'000 
      Wholesale               8,331             1,837             1,594                29 
      E-commerce             36,374            17,466            18,995            10,205 
                   ----------------  ----------------  ----------------  ---------------- 
                             44,705            19,303            20,589            10,234 
                   ================  ================  ================  ================ 
 

There are no sales between the two operating segments, and all revenue is earned from external customers. The operating segments gross profit is reconciled to profit before taxation as per the statement of total comprehensive income.

The Group's overheads are managed centrally by the Board and consequently there is no reconciliation to profit before tax at a segmental level.

The Group's assets are managed centrally by the Board and consequently there is no reconciliation between the Group's assets per the statement of financial position and the segment assets.

   4.    Adjusting non-recuring items 
 
                                     Year Ended        Year Ended 
                                       31 March          31 March 
                                           2021              2020 
                                        GBP'000           GBP'000 
      Administration expenses             2,346                 - 
                                          2,346                 - 
                               ================  ================ 
 

To understand the underlying performance of the business, certain costs included within administrative costs have been classified as adjusting items on the basis of their size and their nature of being non-recurring.

These items principally relate to legal and professional fees relating to the IPO of GBP1,638,000 and bonuses of GBP708,000. Ensuring relevance through a change in product strategy and the increased frequency of launches meant that the Group was well placed to benefit from the accelerated shift to on-line shopping over the year, this rapid change and successful execution of strategy gave rise to specific management and wider employee bonuses which are included in the Adjusting items noted above.

   5.    Dividends 

On 14 October 2020, the company undertook a reduction of capital by way of a solvency statement under section 643 of the Companies Act 2006 for the purposes of section 642 of the Companies Act 2006. This included the cancellation of GBP4,914,000 from the share premium which resulted in an increase in retained earnings of GBP4,914,000.

A dividend of GBP1,250,000 was subsequently declared and paid in December 2020.

On 5 March 2021, the company undertook a further reduction of capital by way of a solvency statement under section 643 of the Companies Act 2006 for the purposes of section 642 of the Companies Act 2006. This included the cancellation of all amounts standing to the credit of the share premium account (being an amount equal to the share premium created on the issue the C preference shares) and the crediting of the resulting amount to the distributable reserves of the company. Following this, the company released its shareholders from any liability they may have to repay any amount of the dividend received by them from the company in December 2020, which was required as a subsequent reassessment identified that there was insufficient retained earnings at the point of paying the dividend.

   6.    Profit/(loss) per share 

Basic profit/(loss) per share is calculated by dividing the net profit/(loss) for the year attributable to ordinary equity holders after tax by the weighted average number of ordinary shares outstanding during the year.

Diluted profit/(loss) per share is not calculated as there are no potential dilutive instruments in issue.

The basic and diluted calculations are both based on the following:

 
                                                             Year Ended         Year Ended 
                                                               31 March           31 March 
                                                                   2021               2020 
                                                                GBP'000            GBP'000 
      Profit/(loss) for the year after tax                          625            (2,157) 
                                                      =================  ================= 
 
                                                             No. ('000)         No. ('000) 
      Weighted average number of shares - basic             140,794,593        152,920,011 
                                                      =================  ================= 
 
      Earnings/(loss) per share - basic and diluted                   -                  - 
                                                      =================  ================= 
 

Annual Report

T he annual report will be mailed to shareholders and made available on our website on or around 30(th) August 2021. Copies will be available after that date from: The Secretary, In The Style Group plc, Unit 5 Olympic Court, Salford M50 2QP

Cautionary Statement

This Preliminary Report has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The Preliminary Report should not be relied on by any other party or for any other purpose.

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