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PRELIMINARY RESULTS FOR THE YEAR ENDED
31 MARCH 2012
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FURTHER PROGRESS IN FY 2012
• STRONG FINANCIAL RESULTS– Revenue up 24%– Adjusted PBT up 26%
• STRONG FOUNDATION– Retail 68% of revenue– Balanced by region– Balanced by product division– Solid operational infrastructure
• INVESTING IN GROWTH OPPORTUNITIES– Shifting to front end
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FINANCIAL REVIEW
—STRONG FOUNDATIONGreat brand, great company
—Future AMBITIONS
Great growth
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CUSTOMER RESOURCESDRIVING RETAIL PRODUCTIVITY
—
QUESTIONS
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STACEY CARTWRIGHT—
EVP, CHIEF FINANCIAL OFFICER
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Financial Highlights
12 MONTHS TO 31 MARCH 2012£M
2011£M
GROWTH
REVENUE 1,857 1,501 24%
ADJUSTED PBT 376.2 297.9 26%
ADJUSTED DILUTED EPS 61.6p 48.9p 26%
DIVIDEND PER SHARE 25.0p 20.0p 25%
NET CASH 338.3 297.9 14%
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REVENUE UP 24%
REVENUE
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REVENUE UP 24%
• REVENUE UP 23% UNDERLYING
• RETAIL– 68% of revenue– 31% underlying growth
• WHOLESALE– 26% of revenue– 8% underlying growth
• LICENSING– 6% of revenue– 5% underlying growth
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RETAIL REVENUE UP 31%*
REVENUE
* UNDERLYING
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RETAIL REVENUE UP 31%
• RETAIL REVENUE UP 31% UNDERLYING– 14% comparable store sales growth– 6% from China acquisition– 11% from new space
• COMPARABLE STORE SALES UP 14%– H1: +16%; H2: +12%
• DOUBLE-DIGIT MAINLINE GROWTH IN ALL PRODUCT DIVISIONS– Core outerwear and large leather goods– Replenishment– Burberry London– Menswear
• DOUBLE-DIGIT MAINLINE GROWTH IN ALL REGIONS– Strong performance from flagship markets in UK, France, Germany and Greater China– Softness in Italy and Korea– China comps well over 20% in full year
• OUTLOOK FOR FY 2013– 12-14% space growth, biased to larger format stores
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REVENUE
WHOLESALE REVENUE UP 8%*
* UNDERLYING
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WHOLESALE REVENUE UP 8%
• UP OVER 20% EXCLUDING– Impact of conversion to retail of China, Saudi Arabia and Spanish menswear– Accelerated rationalisation of distribution in US and Europe, especially in H2
• GROWTH DRIVERS– Asia Travel Retail, Emerging Markets and US department stores– Now over 80 dedicated shop-in-shops in key US department stores– Core outerwear, monthly floorsets
• OUTLOOK FOR H1 2012/13– Up mid single-digit % underlying– Double-digit growth expected in key US department store doors, Emerging Markets and Asia
Travel Retail
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REVENUE
LICENSING REVENUE UP 5%*
* UNDERLYING
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LICENSING REVENUE UP 5%
• UP 10% AT REPORTED FX
• ADDRESSING LEGACY ISSUES COST £9M– Additional Japanese non-apparel non-renewals– Impact from terminated menswear licences
• GLOBAL PRODUCT LICENCES UP 20%– Successful launch of Burberry Body fragrance – Aligning positioning of eyewear and timepieces– InterParfums discussions continue
• JAPANESE APPAREL– Step-up in royalty income from 1 January 2009 renegotiation– Licence terminates June 2015
• OUTLOOK FOR FY 2013– Broadly unchanged year-on-year at constant and reported FX– Double-digit underlying growth in global product licences – Offset by further downsizing of Japanese non-apparel licences
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ADJUSTED OPERATING PROFIT UP 25%
ADJUSTED OPERATING PROFIT
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RETAIL/WHOLESALE MARGIN AT 16.4%
49% 52% 60% 64% 68%RETAIL AS % OF TOTAL SALES
RETAIL/WHOLESALE OPERATING PROFIT MARGIN
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RETAIL/WHOLESALE PROFIT UP 31%
12 MONTHS TO 31 MARCH 2012£M
2011£M
CHANGE
RETAIL/WHOLESALE REVENUE 1,748.6 1,402.9 25%
GROSS MARGIN 1,190.3 911.3
AS % OF REVENUE 68.1% 64.9% 320bps
OPERATING EXPENSES (903.4) (691.8)
AS % OF REVENUE (51.7%) (49.3%) (240bps)
ADJUSTED OPERATING PROFIT 286.9 219.5 31%
AS % OF REVENUE 16.4% 15.6% 80bps
GOAL IS TO MANAGE GROSS MARGIN AND OPERATING EXPENSES DYNAMICALLY TO
DELIVER FURTHER MODEST RETAIL/WHOLESALE OPERATING MARGIN IMPROVEMENT IN
FY 2013, TO BE DELIVERED IN H2
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RETAIL/WHOLESALE GROSS MARGIN UP 320bps
RETAIL/WHOLESALE GROSS MARGIN
49% 52% 60% 64% 68%RETAIL AS % OF TOTAL SALES
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RETAIL/WHOLESALE GROSS MARGIN UP 320bps
• GROSS MARGIN AT 68.1%– Up 320 basis points
• DRIVEN BY– China conversion and outperformance– Pricing and sourcing– Channel shift to retail– Geographic shift to Asia Pacific
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RETAIL/WHOLESALEOPERATING EXPENSES/REVENUE AT 51.7%
ADJUSTED OPERATING EXPENSES/REVENUE
49% 52% 60% 64% 68%RETAIL AS % OF TOTAL SALES
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• INCREASE REFLECTS SHIFT TO RETAIL– Retail 68% of revenue (2011: 64%)
• THREE KEY AREAS OF INCREASED INVESTMENT– New space– New markets (China, Latin America, Saudi, India)– Central functions, especially marketing, IT/digital technology and customer services and insight
RETAIL/WHOLESALEOPERATING EXPENSES/REVENUE AT 51.7%
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232012 INCLUDES FX BENEFIT OF £5.4M IN REVENUE AND £0.1M IN OPEX
LICENSING PROFIT
12 MONTHS TO 31 MARCH 2012£M
2011£M
REVENUE 108.6 98.4
GROSS MARGIN AT 100% 108.6 98.4
OPERATING EXPENSES (18.6) (16.8)
OPERATING PROFIT 90.0 81.6
OPERATING MARGIN 82.9% 82.9%
YEN RATE 133 144
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INCOME STATEMENT
12 MONTHS TO 31 MARCH 2012£M
2011£M
ADJUSTED OPERATING PROFIT 376.9 301.1
NET FINANCE CHARGE (0.7) (3.2)
ADJUSTED PROFIT BEFORE TAX 376.2 297.9
EXCEPTIONAL ITEMS (10.2) (2.2)
PROFIT BEFORE TAX 366.0 295.7
TAX (100.6) (83.2)
DISCONTINUED OPERATIONS (0.3) (6.2)
NON-CONTROLLING INTEREST (1.8) 2.1
ATTRIBUTABLE PROFIT 263.3 208.4
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INCOME STATEMENT
• NET FINANCE CHARGE OF £0.7M– Facility fees offset income on cash balance– Expect slightly positive interest income in FY 2013
• EXCEPTIONAL ITEMS OF £10.2M– China put option liability finance charge– Non-cash in year
• TAX RATE OF 26.7%– In line with guidance– Expect tax rate of 25-26% in FY 2013
• NON-CONTROLLING INTEREST OF £1.8M– Reflects income in China and Middle East offset by losses in Japan and India
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CASH POSITION STRENGTHENED AFTER FUNDING INVESTMENT
INVESTMENT* NET CASH/(DEBT)
* CAPEX PLUS ACQUISITION SPEND
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CASH INFLOW FROM OPERATIONS
12 MONTHS TO 31 MARCH 2012£M
2011£M
ADJUSTED OPERATING PROFIT 376.9 301.1
SPAIN OPERATING PROFIT/(LOSS) 2.5 (2.1)
RESTRUCTURING SPEND (8.6) (20.3)
DEPRECIATION AND AMORTISATION 87.6 62.6
EMPLOYEE SHARE SCHEME COSTS 31.8 28.3
(INCREASE) IN INVENTORIES (61.8) (58.0)
(INCREASE) IN RECEIVABLES (17.4) (8.1)
INCREASE IN PAYABLES 70.1 68.0
OTHER NON-CASH ITEMS 1.4 (5.1)
CASH INFLOW FROM OPERATIONS 482.5 366.4
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Movement in net cash
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TOTAL CASH FLOW
12 MONTHS TO 31 MARCH 2012£M
2011£M
CASH INFLOW FROM OPERATIONS 482.5 366.4
CAPITAL EXPENDITURE (153.1) (108.4)
CAPITAL CONTRIBUTIONS FROM JV PARTNERS 4.9 7.0
ACQUISITIONS (23.5) (51.9)
NET INTEREST (0.6) (3.2)
TAX PAID (108.2) (98.1)
FREE CASH FLOW 202.0 111.8
DIVIDENDS (99.2) (68.7)
ESOP PURCHASES/OTHER (60.0) (5.6)
EXCHANGE DIFFERENCE (2.4) (1.6)
TOTAL CASH FLOW 40.4 35.9
NET CASH AT 31 MARCH 338.3 297.9
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CAPITAL EXPENDITURE FOCUSED ON RETAIL
£180 – 200m
£153m
CAPITAL EXPENDITURE
• CAPITAL EXPENDITURE PLANNED AT £180-200M IN FY 2013– Increase in flagship markets
• New stores and refurbishments• Larger format, mainline stores and concessions
• 12-14% SPACE GROWTH IN FY 2013– Increasingly biased to larger format stores in
flagship markets– Larger stores are typically lower sales densities
than small stores
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IRR VERSUS STORE SIZE
AVERAGE STORE SIZE
No average store
IRR VERSUS SALES DENSITIES
AVERAGE SALES DENSITY
EXCLUDES SIGNIFICANT OUTLIERS
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Drive OUTPERFORMANCE IN revenue growth and modest improvement in retail/wholesale operating
margin
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OUTLOOK
FY 2013 Further modest retail/wholesale operating margin improvement in full year- H1 margin lower
RETAIL 12-14% increase in average selling space in FY 2013- Higher proportion of larger format stores
WHOLESALE Mid single-digit % underlying growth in H1
LICENSING Broadly unchanged year-on-year in FY 2013- At constant and reported FX
INTEREST Small positive credit in FY 2013
DEPRECIATION £100-110m in FY 2013
UNDERLYING TAX RATE 25-26% for FY 2013
DIVIDEND POLICY 40% full year payout based on adjusted diluted EPS
CAPITAL EXPENDITURE £180-200m in FY 2013
INVENTORIES Grow less than retail sales
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ANGELA AHRENDTS
—
CHIEF EXECUTIVE OFFICER
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THE JOURNEY TO DATE
REVENUE
ADJUSTED PBT
150%
124%
• SIGNIFICANT INVESTMENT
• DIGITAL INNOVATION
• BRAND ELEVATION
• CULTURE
• GREAT BRAND, GREAT COMPANY
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SIGNIFICANT SHIFT TO RETAIL
FY 2006 REVENUE £743M
RETAIL: 68%300% GROWTH
WHOLESALE: 26%39% GROWTH
LICENSING: 6%34% GROWTH
FY 2012 REVENUE £1,857M
RETAIL: 43%WHOLESALE:
46%
LICENSING: 11%
GROWTH 2006 TO 2012
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INCREASED EXPOSURE TO GROWTH MARKETS
EUROPE: 32%189% GROWTH EX SPAIN
AMERICAS: 25%144% GROWTH
ROW: 6%696% GROWTH
ASIA PACIFIC: 37%351% GROWTH
FY 2006 RETAIL/WHOLESALE REVENUE £662M FY 2012 RETAIL/WHOLESALE REVENUE £1,748M
GROWTH 2006 TO 2012
EUROPE: 29%
AMERICAS:27%
ROW: 2%
ASIA PACIFIC:22%
SPAIN:20%
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BALANCED PRODUCT MIX
NON-APPAREL: 39%264% GROWTH
WOMENS: 33%134% GROWTH
CHILDRENS: 4%287% GROWTH
MENS: 24%99% GROWTH
NON-APPAREL:28%
WOMENS: 38%
CHILDRENS: 3%
MENS:31%
FY 2006 RETAIL/WHOLESALE REVENUE £662M FY 2012 RETAIL/WHOLESALE REVENUE £1,748M
GROWTH 2006 TO 2012
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LEVERAGE THE FRANCHISE
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INTENSIFY NON-APPAREL
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ACCELERATE RETAIL-led GROWTH
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INVEST IN UNDER-PENETRATED MARKETS
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Pursue OPERATIONAL EXCELLENCE
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LEVERAGE THE FRANCHISE
FY 2006 FY 2012
5%
40%
55%
1%
BRIT
LONDON
PRORSUM
26%
73%
BRAND ELEVATION
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synchronisation
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Innovative marketing
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LEVERAGE THE FRANCHISE
• FOCUS– Menswear
• 24% of revenue• 26% underlying growth• Optimise outerwear • Tailoring initiatives
• OPPORTUNITIES– Unlocking the potential in our licences
• Japan• Global products
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INTENSIFY NON-APPAREL
REVENUE
264%
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• FOCUS– Soft accessories– Shoes
• OPPORTUNITIES– Men’s accessories
INTENSIFY NON-APPAREL
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ACCELERATE RETAIL-led GROWTH
NUMBER OF STORES
Mainline Concessions
COMPARABLE STORE SALES GROWTH
* EXCLUDES DISCONTINUED STORES IN SPAIN
*
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ACCELERATE RETAIL-led GROWTH
• FOCUS– Productivity improvements driven by
customer service and insight– Leverage investment in burberry.com
• OPPORTUNITIES– Execute flagship/cluster strategy
• Prioritise corporate initiatives• Concept stores• Larger format stores
– Space growth of at least 10% per annum over the next three years
TAIPEI
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REVENUE IN EMERGING MARKETS
9.5x
INVEST IN UNDER-PENETRATED MARKETS
EMERGING MARKETS INCLUDE CHINA, MIDDLE EAST, TURKEY, LATIN AMERICA, INDIA, RUSSIA AND EASTERN EUROPE
NUMBER OF STORES IN EMERGING MARKETS
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• FOCUS– Further align Chinese operations– Engage with Chinese consumers globally– Upgrade presence in US department stores
• OPPORTUNITIES– Better serve Latin American and Indian luxury
consumers• Compelling demographics• Serve at home and when travelling
– Explore new small markets with franchisees
INVEST IN UNDER-PENETRATED MARKETS
MEXICO
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RETAIL/WHOLESALE GROSS MARGIN
PURSUE OPERATIONAL EXCELLENCE
• ACHIEVEMENTS– Reduced the number of vendors– Rationalised DCs from 24 to 3– Reduced carriers from 30 to 3– Implemented SAP across all major markets– Established global planning function
1,300bps
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PURSUE OPERATIONAL EXCELLENCE
• FOCUS– Support business growth in logistics
• European hub• Asian hub• China LDC• Digital fulfillment
• OPPORTUNITIES– Drive productivity and efficiency through existing
infrastructure, optimising• Global assortments• Monthly flow• Replenishment• Inventory
– Improve connectivity through social enterprise platform
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LEVERAGE THE FRANCHISE
INTENSIFY NON-APPAREL
ACCELERATE RETAIL-LED GROWTH
INVEST IN UNDER-PENETRATED MARKETS
PURSUE OPERATIONAL EXCELLENCE
CONTINUING THE JOURNEY
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REG SINDALL—
EVP, CORPORATE RESOURCES
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NOTHING WITHOUT GREAT SERVICE
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CUSTOMER RESOURCES TODAY
GLOBAL SALES AND SERVICE
GLOBAL VIC PROGRAMME
GLOBAL CUSTOMER ENGAGEMENT
GLOBAL CUSTOMER DATAAND ANALYTICS
SERVICE & PRODUCTIVITY
CLIENT SERVICES
CUSTOMER SERVICES
CUSTOMER INSIGHT
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SERVICE AND PRODUCTIVITY
TO DELIVER AN INNOVATIVE, NUMBER ONE CUSTOMER
EXPERIENCE, POSITIONING SERVICE AS A DISTINCTIVE ASSET
OF THE BURBERRY BRAND
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SERVICE AND PRODUCTIVITY
• BURBERRY EXPERIENCE FROM 2008– All 4,000+ sales associates– Global consistency
• BURBERRY EXPERIENCE 2.0 FROM 2011– 2,500 sales associates to date– Build customer loyalty
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SERVICE AND PRODUCTIVITY
• INNOVATION TO DIFFERENTIATE SERVICE– “Chinese customer in your store” from 2011
• Unique programme• Customer segmentation• 650 sales associates to date
– “Brazilian customer in your store” to launch
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SERVICE AND PRODUCTIVITY
• FOCUS– Help drive retail comp growth– Mystery shopping scores improving
• OPPORTUNITIES– Roll out programme beyond own retail
• Franchisees• Wholesale• Customer and client services
– Support innovative technology in store– Improve analytical and reporting capabilities
to drive sales
GLOBAL MYSTERY SHOPPING SCORE
CHINA MYSTERY SHOPPING SCORE
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CLIENT SERVICES
TO OFFER A CONSISTENT ONE-TO-ONE PERSONALISED
MULTI-CHANNEL LUXURY SHOPPING EXPERIENCE TO OUR VERY IMPORTANT CLIENTS (VICS)
ACROSS THE GLOBE
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UNITS PER TRANSACTION
DRIVING LOYALTY AND SALES FROM VICS
AVERAGE UNIT REALISATION
AVERAGE TRANSACTION VALUE
DATA FOR FY 2011/12
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CLIENT SERVICES – OPPORTUNITIES
• DOUBLE NUMBER OF VIC CONSULTANTS– Focus on flagship markets
• INVEST IN INFRASTRUCTURE– In store– Work with third parties– Customer insight
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CUSTOMER SERVICES
To inspire and empower every customer with every contact
through every channel
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AN INDUSTRY LEADING SERVICE
Burberry Luxury Peer 1
Luxury Peer 2
Online retailer
Technologycompany
Telephone Store only
Click to Call
Click to Chat
24/7 service Email only Email only
Number of languages
14 6 8 1 18
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CUSTOMER SERVICES
• FOCUS– Growing volumes– Direct sales
• OPPORTUNITIES– Explore new digital technology to connect with
customers• Social media• Mobile• Video chat
– Drive retail productivity by taking store calls• Early trials encouraging
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CUSTOMER INSIGHT
Turning data into intelligence, intelligence into insight and
insight into foresight
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CUSTOMER INSIGHT
Customer insight
Strategic
Decision making
One to one
marketing
clientelling
Tailored web
experience
Store
staffing
planning
merchandising
marketing
7070
CUSTOMER INSIGHT
• FOCUS– Data cleansing/capture– Invest in analytics
• Collective behaviour• Personalisation
• OPPORTUNITIES– Transformational investment– Innovative technology– Identifying individual customers in real time
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7171
CUSTOMER RESOURCES
• BUILT THE FOUNDATION– Service and productivity– Client services– Customer services– Customer insight
• OPPORTUNITIES– Identify individual customers– Create connection with the brand– Communicate using innovative digital technology– Make better decisions
– DRIVING LOYALTY, CONVERSION AND RETAIL PRODUCTIVITY
7272
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Great brand, great company, great growth
—
Built STRONG FOUNDATION forSustained profitable growth
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Great AMBITIONS
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.AS BURBERRY PREPARES FOR
TOMORROW’S CHALLENGES, ONE KEY MEASURE OF SUCCESS WILL
BE HOW MANY LIVES AROUND THE WORLD CAN BE TOUCHED AND TRANSFORMED THROUGH THE POWER OF ITS PERFORMANCE
SOURCE: IDEA COUTURE
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DISCLAIMER
Certain statements made in this presentation are forward-looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from any expected future results in forward-looking statements. Burberry Group plc undertakes no obligation to update these forward-looking statements and will not publicly release any revisions it may make to these forward-looking statements that may result from events or circumstances arising after the date of this document. All persons, wherever located, should consult any additional disclosures that Burberry Group plc may make in any regulatory announcements or documents which it publishes. All persons, wherever located, should take note of these disclosures. This presentation does not constitute an invitation to underwrite, subscribe for or otherwise acquire or dispose of any Burberry Group plc shares, in the UK, or in the US, or under the US Securities Act 1933 or in any other jurisdiction.
BURBERRY, the Equestrian Knight Device and the Burberry Check are trademarks belonging to Burberry which are registered and enforced worldwide.
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ADJUSTED MEASURES
Adjusted measures exclude
• Restructuring costs of nil in 2012 (2011: £1.0m credit relating to the Group’s cost efficiency programme announced in January 2009)
• The put option liability finance charge relating to the third party 15% economic interest in the Chinese business in 2012 of £10.2m (2011: £3.2m)
• Losses from discontinued Spanish operations in 2012 of £0.3m (2011: £6.2m)
Underlying change is calculated at constant exchange rates
Certain financial data within this presentation have been rounded
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Charlotte Cowley (on maternity leave)
Investor Relations Manager
Kim Warren
Investor Relations Associate
IR CONTACTS
Fay Dodds
Director of Investor Relations
Horseferry House
Horseferry Road
London
SW1P 2AW
Tel: +44 (0)20 3367 3524
www.burberryplc.com
www.burberry.com
www.artofthetrench.com
www.facebook.com/burberry
www.twitter.com/burberry
www.youtube.com/burberry
https://plus.google.com/burberry
Adam Wright
Investor Relations Manager
