We recognise the need to continuously update our core systems and processes to maximise efficiency, improve customer experience and ensure the business is set for future growth. The significant investment in our technology infrastructure will be carried out over a number of years, starting with the migration of our legacy Ecommerce platform over to microservices technology. This will provide us with much needed agility, better functionality to improve our promotional mechanics and to future-proof us against wider technology developments. We have chosen to build the platform internally, allowing us to control the roadmap and tailor the platform to our needs. We expect this to be ready to launch in early 2022.

We have made great technological progress in our logistics operation, and the team has received awards for the use of advanced robotics which have tripled our efficiency rates for processing Ecommerce returns. These include a CILT Award for Excellence 2020 for our Warehouse Operations, The Technology Transformation Award from The Logistics Awards and a Supply Chain Excellence Award 2020. We will continue to innovate in this area, rolling out automation across our global network of fulfilment centres.

Despite the enforced stores closures, we have reduced our total inventory by 2.3m units (14%), due to a disciplined inventory buy and optimised use of clearance channels. This more efficient stock management strategy will allow us to reduce our inventory further in FY22, even with the expectation of continued headwinds as the world recovers from the impacts of the pandemic.

The inventory reduction was a key driver in our net cash balance ending the year up GBP2.2m at GBP38.9m and I am particularly pleased that we did not have to use our Asset Backed Lending ('ABL') facility, maintaining a net cash balance in excess of GBP20m throughout the period.

Rent negotiations have been another priority for the business this year as part of our plan to return stores to profitability. During H2 we have continued to negotiate rent relief from landlords relating to the extended periods of enforced closures. As at the year end, we recognised GBP7.7m of one-off rent savings and are anticipating in excess of GBP10m in FY22. These non-recurring credits are in addition to the underlying annualised cash lease renewal savings of GBP5.3m agreed in FY21 from the 39 stores renegotiated in the period. We will continue to negotiate reductions and are not afraid to walk away if we are unable to get the right deal, and we exited 15 stores during FY21 where the landlord was unwilling to regear the lease to acceptable terms.

We remain committed to the high street. Post year-end we announced our exit from Regent Street and our move to open our new global flagship store on London's Oxford Street. The new store will bring the brand reset to life, showcasing the five collections over 22,000 sq ft of sales space across two floors. The store will have sustainability embedded through our product, the customer experience and the building itself. The lower ground floor will house Wholesale showrooms and versatile space to be used as a base for the brand ambassador, influencer, and affiliate programmes.

During the pandemic, we have continued to make use of available furlough, or similar, support across all territories, to retain as many of our colleagues as possible. The support we have received is outlined as part of our Covid-19 review. For as long as there is uncertainty and volatility due to the pandemic, continued support will be needed from the government to all retailers in the sector, and we continue to strongly encourage a fundamental review of the current business rates system in the UK.

Looking forward

We continue to make progress in turning around and evolving the brand, despite the significant challenges we have faced as a result of the Covid-19 pandemic. I am impressed by the dedication of our team throughout this period and would like to thank everyone for their unwavering hard work and enthusiasm.

Our newly articulated strategy means our people are fully aligned with our objectives, focusing on product, social and sustainability, underpinned by our ongoing digital transformation. While the economic backdrop remains uncertain, it is clear to me that there is a lot to look forward to.

1. 'Lost trading days' calculated as the simple average number of stores closed each day of the period as a percentage of total potential trading days in the period, excludes impact of restricted trading hours.

2. Cash annualised saving has been calculated based on the effective date of the lease agreement.

CFO Review

Group revenue decreased by 21%, largely driven by the forced closure of our store estate as a result of Covid-19. Despite the significant number of store days lost this year, the adjusted loss before tax reduced by 70%, with cost saving measures and government support helping to offset trading shortfalls. Whilst significant uncertainty remains, we expect a recovery in FY22. 


                                                                                                2021    2020*   Change 
                                                                                                GBPm      GBPm      % 
Revenue:                         Stores                                                         140.5   287.2   (51.1)% 
                                 Ecommerce                                                      201.8   151.6   33.1% 
                                 Wholesale                                                      213.8   265.6   (19.5)% 
Group revenue                                                                                   556.1   704.4   (21.1)% 
 
Gross profit:                    Stores                                                         93.6    192.5   (51.4)% 
                                 Ecommerce                                                      117.5   90.5    29.8% 
                                 Wholesale                                                      82.0    94.9    (13.6)% 
Group profit                                                                                    293.1   377.9   (22.4)% 
Gross profit margin %                                                                           52.7%   53.6%   (0.9) 
                                                                                                                %pts 
Selling and distribution costs                                                                  (258.7) (342.0) (24.4)% 
Central costs                                                                                   (62.9)  (70.1)  (10.3)% 
Impairment credit/(losses) on                                                                   3.8     (9.2)   (141.3) 
trade receivables                                                                                               % 
Adjusted other gains and                                                                        19.3    9.1     112.1% 
losses** 
Adjusted operating loss**                                                                       (5.4)   (34.3)  (84.3)% 
Adjusted operating margin**                                                                     (1.0)%  (4.9)%  (3.9) 
                                                                                                                %pts 
 
Net finance (expense)                                                                           (7.2)   (7.5)   (4.0)% 
Adjusted loss before tax**                                                                      (12.6)  (41.8)  (69.9)% 
 
Adjusting items: 
                                 Unrealised (loss)/gain on financial derivatives                (4.7)   1.9     (347.4) 
                                                                                                                % 
                                 IFRS2 charge - Founder Share Plan                              (0.5)   (0.3)   66.7% 
                                 Restructuring, strategic change and other costs                (1.0)   (1.9)   (47.4)% 
                                 Intangibles asset impairment                                   (2.1)   -       100.0% 
                                 Store asset impairment charges and reversals and onerous       (15.8)  (124.8) 87.3% 
                                 property related contracts provision 
Total adjusting items                                                                           (24.1)  (125.1) (80.7)% 
Loss before tax                                                                                 (36.7)  (166.9) (78.0)% 
Tax (expense)/credit                                                                            0.6     23.5    (97.4)% 
Loss for the period                                                                             (36.1)  (143.4) (74.8)%

* Fulfil From Store ('FFS') sales reallocated to Ecommerce in the current year (GBP8.3m) and prior year (GBP1.6m) comparatives. The gross margin impact is GBP5.2m in the current year and GBP1.0m in the prior year comparatives. FFS relates to sales made online, but fulfilled from store stock.

** Adjusted operating loss, adjusted margin and adjusted loss before tax are defined as reported results before adjusting items as further explained in Note 22. The comparative in the prior year was referred to as 'Exceptional'.

Group revenue decreased by GBP148.3m to GBP556.1m. This 21.1% reduction was driven largely by the forced closure of a significant part of our store estate as a result of Covid-19 related national or regional lockdowns and the corresponding impact on our Wholesale partners.

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September 16, 2021 02:00 ET (06:00 GMT)