Embed Size (px)
Citation preview
11
Preliminary resultsfor the year ended
31 march 2013
22
FURTHER YEAR OF PROGRESS
• STRONG FINANCIAL RESULTS
– Revenue up 8% to £2bn
– Adjusted PBT up 14% to £428m
– Full year dividend up 16% to 29.0p
• CONSISTENT EXECUTION OF FIVE KEY STRATEGIES
– Beauty integration
– Mens accessories up over 30%
– 23 mainline stores opened; digital enhanced
– China grew about 20%
– Inventory tightly managed
33
Financial review–
BEAUTYSeizing the opportunity
–Questions
44
55
REVENUE GREW 8%
£1,857m £1,999m
(£16m) £153m £6m (£1m)
FY 2012 EXCHANGE RATES
RETAIL WHOLESALE LICENSING FY 2013
REVENUE
66
REVENUE GREW 8%
• REVENUE GREW 8% TO £2BN
– Doubled since 2008
• RETAIL
– 71% of revenue (H2: 75%)
– 12% underlying growth
• WHOLESALE
– 24% of revenue
– 1% underlying growth
• LICENSING
– 5% of revenue
– 1% underlying decline
77
BRAND MOMENTUM STRONG
15M FACEBOOK FANS
BEAUTY BOOTH
LONDON HEATHROW T5
ART OF THE TRENCH, BRAZIL
88
BURBERRY WORLD LIVE
KAISER CHIEFS LIVE LIVESTREAM OF AW13 RUNWAY SHOW
RFID–ENABLED SCREENSDEDICATED SPACE FOR BESPOKE
99
RETAIL REVENUE GREW 12%
REVENUE
1010
RETAIL REVENUE GREW 12%
• COMPARABLE STORE SALES UP 5%
– Double-digit comparable store growth throughout FY 2012
– Uneven trading pattern in FY 2013
– Footfall soft offline; grew online
• CONSISTENT DRIVERS OF RETAIL GROWTH
– Optimise conversion
– Higher average transaction values
1111
INVESTING IN FLAGSHIP MARKETS
MICHIGAN AVENUE, CHICAGO
PACIFIC PLACE, HONG KONG BURBERRY.COM
REGENT STREET, LONDON
1212
NUMBER OF MAINLINE STORES
NO CHANGE IN REAL ESTATE STRATEGY
* FIVE STORES TRANSFERRED FROM SAUDI ARABIA FRANCHISEE
1313
REVENUE
WHOLESALE REVENUE GREW 1%*
* UNDERLYING
1414
WHOLESALE REVENUE GREW 1%
• IN LINE WITH GUIDANCE
• GROWTH FROM NORTH AMERICA, ASIA TRAVEL RETAIL AND EMERGING MARKETS
– Weak domestic demand in Europe
– Own actions to rationalise products and accounts
• H1 2013 PLANNED DOWN ABOUT 10% UNDERLYING EXCLUDING BEAUTY
– Wholesale customers globally planned more conservatively
– Own actions continue
1515
EVOLUTION OF WHOLESALE
DISCONTINUED AND ACQUIRED
OPERATIONS*
REVENUE £489MFY 2009
EUROPE
REST OF WORLD
ASIA PACIFIC
AMERICAS
REST OF WORLD
ASIA PACIFIC
AMERICAS
EUROPE
REVENUE £473MFY 2013
* SPAIN CLOSURE, CHINA, INDIA AND MIDDLE EAST TO RETAIL
1616
LICENSING REVENUE DOWN 1%*
REVENUE
* UNDERLYING
1717
AVIATOR
THE BRITAIN
INNOVATION IN LICENSING
SPLASH
BODY TENDER
1818
TRANSFORMING JAPAN
JAPAN
WATCHES/EYEWEAR
FRAGRANCE &BEAUTY
OTHER
LICENSING REVENUE £109mFY 2013
KOBE, JAPAN
1919
BALANCED BY REGION
ASIA PACIFIC: 39% 13% GROWTHAMERICAS: 25%
6% GROWTH
EUROPE: 30%6% GROWTH
REST OF WORLD: 6%11% GROWTH
% GROWTH ON UNDERLYING BASISFY 2013 RETAIL/WHOLESALE REVENUE
2020
MAINLAND CHINA GREW ABOUT 20%
• EVOLVE STORE PORTFOLIO
• OPTIMISE DIGITAL
• REFINEMENT BASED ON RESEARCH
– Evolve and elevate assortment
– Invest in service
– Enhance brand communication
2121
BALANCED BY PRODUCT DIVISION
WOMENS: 33% 7% GROWTH
MENS: 24%14% GROWTH
ACCESSORIES: 39%8% GROWTH
CHILDRENS: 4%9% GROWTH
% GROWTH ON UNDERLYING BASISFY 2013 RETAIL/WHOLESALE REVENUE
2222
STRONG GROWTH IN MENS
MENSKNIGHTSBRIDGE
STORE
KNIGHTSBRIDGE MENS, LONDON
TAILORING
MENS ACCESSORIES
2323
INNOVATION IN LADIES LARGE LEATHER
BLAZEORCHARD
2424
LEVERAGE THE FRANCHISE
INTENSIFY ACCESSORIES
ACCELERATE RETAIL-LED GROWTH
INVEST IN UNDER-PENETRATED MARKETS
PURSUE OPERATIONAL EXCELLENCE
CONTINUING THE JOURNEY
2525
Carol fairweather—
CHIEF FINANCIAL OFFICER Designate
2626
FINANCIAL HIGHLIGHTS
12 MONTHS TO 31 MARCH 2013£M
2012£M GROWTH
REVENUE 1,999 1,857 8%
ADJUSTED PBT 428 376 14%
ADJUSTED DILUTED EPS 70.0p 61.6p 14%
CASH INFLOW FROM OPERATIONS 523 483 8%
DIVIDEND PER SHARE 29.0p 25.0p 16%
2727
OPERATING PROFIT UP 14%
ADJUSTED OPERATING PROFIT
2828
RETAIL/WHOLESALE MARGIN AT 17.8%
RETAIL/WHOLESALE ADJUSTED OPERATING PROFIT MARGIN
2929
RETAIL/WHOLESALEGROSS MARGIN UP 250BPS
RETAIL/WHOLESALE GROSS MARGIN
52% 60% 64% 68% 71%RETAIL AS % OF TOTAL REVENUE
3030
• GROSS MARGIN AT 70.6%– Up 250 basis points
• DRIVEN BY– Higher average selling prices– FX on sourcing– Channel shift to retail– H2
• Stronger retail sales• Improved inventory management
RETAIL/WHOLESALEGROSS MARGIN UP 250BPS
3131
ADJUSTED OPERATING EXPENSES/REVENUE
52% 60% 64% 68% 71%RETAIL AS % OF TOTAL REVENUE
* 53.5% EXCLUDING BENEFIT FROM LOWER PERFORMANCE-RELATED PAY CHARGE
RETAIL/WHOLESALE OPERATING EXPENSES/REVENUE AT 52.8%
3232
RETAIL/WHOLESALE OPERATING EXPENSES/REVENUE AT 52.8%
• OPERATING EXPENSES/REVENUE AT 52.8%
– Up 110 basis points
– Up 180 basis points excluding benefit of £12m lower performance-related pay charge
• DRIVEN BY
– New space (over half of £m increase)
– Tight control of discretionary spend
– To fund continuing investment
33332013 INCLUDES FX BENEFIT OF £1.7M IN REVENUE AND OPEX
LICENSING PROFIT
12 MONTHS TO 31 MARCH 2013£M
2012£M
REVENUE 109.4 108.6
GROSS MARGIN AT 100% 109.4 108.6
OPERATING EXPENSES (16.9) (18.6)
OPERATING PROFIT 92.5 90.0
OPERATING MARGIN 84.6% 82.9%
YEN RATE 127 133
3434
LICENSING PROFIT
• £109M REVENUE INCLUDES ROYALTY FROM FRAGRANCE AND BEAUTY LICENCE
– Fragrance royalty £27m
– Revenue ex-fragrance £82m
• FY 2014 LICENSING REVENUE ON £82M BASE EXPECTED TO BE
– Slightly positive at constant exchange rates
– Broadly unchanged at reported exchange rates
3535
INCOME STATEMENT
12 MONTHS TO 31 MARCH 2013£M
2012£M
ADJUSTED OPERATING PROFIT 428.1 376.9
NET FINANCE CHARGE (0.3) (0.7)
ADJUSTED PROFIT BEFORE TAX 427.8 376.2
EXCEPTIONAL ITEMS (77.1) (10.2)
PROFIT BEFORE TAX 350.7 366.0
TAX (91.5) (100.6)
DISCONTINUED OPERATIONS - (0.3)
NON-CONTROLLING INTEREST (4.9) (1.8)
ATTRIBUTABLE PROFIT 254.3 263.3
3636
INCOME STATEMENT
• NET FINANCE CHARGE OF £0.3M
– Broadly neutral in FY 2014
• EXCEPTIONAL ITEMS OF £77.1M
– £82.9m due to termination of fragrance licence relationship
• £71.3m expense related to termination payment
• £2.7m related costs
• £8.9m set up costs
– £5.2m credit due to fair value movements on China put option liability
– £0.6m credit due to release of cost efficiency programme provision
• TAX RATE OF 25.8% ON ADJUSTED PBT
– Expected tax rate of c.25% in FY 2014
• NON-CONTROLLING INTEREST OF £4.9M
– Reflects income in China and Middle East partially offset by losses in India and Japan retail
– Taking effective full ownership of Japan retail
3737
Strong cash generation
CASH INFLOW FROM OPERATIONS USES OF CASH
* INVESTMENT IS CAPITAL EXPENDITURE PLUS ACQUISITION SPEND
3838
CASH INFLOW FROM OPERATIONS
12 MONTHS TO 31 MARCH 2013£M
2012£M
ADJUSTED OPERATING PROFIT 428.1 376.9
SPAIN OPERATING PROFIT - 2.5
RESTRUCTURING SPEND (1.0) (8.6)
DEPRECIATION AND AMORTISATION 111.2 87.6
EMPLOYEE SHARE SCHEME COSTS 24.9 31.8
(INCREASE) IN INVENTORIES (39.2) (61.8)
(INCREASE) IN RECEIVABLES (32.0) (17.4)
INCREASE IN PAYABLES 17.6 70.1
OTHER NON-CASH ITEMS 13.4 1.4
CASH INFLOW FROM OPERATIONS 523.0 482.5
3939
MOVEMENT IN NET CASH
4040
MOVEMENT IN NET CASH
12 MONTHS TO 31 MARCH 2013£M
2012£M
CASH INFLOW FROM OPERATIONS 523.0 482.5
CAPITAL EXPENDITURE (175.9) (153.1)
PAYMENT TO TERMINATE LICENCE RELATIONSHIP (144.1) -
PROCEEDS FROM SALE OF ASSETS HELD FOR SALE 0.1 -
CAPITAL CONTRIBUTIONS FROM JV PARTNERS 0.4 4.9
ACQUISITIONS (1.0) (23.5)
NET INTEREST 0.9 (0.6)
TAX PAID (99.0) (108.2)
FREE CASH FLOW 104.4 202.0
DIVIDENDS (113.5) (99.2)
ESOP PURCHASES/OTHER (45.4) (60.0)
EXCHANGE DIFFERENCE 12.8 (2.4)
MOVEMENT IN NET CASH (41.7) 40.4
NET CASH AT 31 MARCH 296.6 338.3
4141
CAPITAL EXPENDITURE FOCUSED ON RETAIL
c.£200m
£176m
CAPITAL EXPENDITURE
• CAPITAL EXPENDITURE PLANNED AT C.£200M IN FY 2014
– Focus on retail
– Digital
– Mobile
– Headquarters extension
4242
FRAGRANCE AND BEAUTYESTIMATED FINANCIAL IMPACT
FY 2013£M
FY 2014F£M
WHOLESALE REVENUE - 140
RETAIL/WHOLESALE OPERATING PROFIT - 25
LICENSING PROFIT - (25)
ADJUSTED PBT* - -
EXCEPTIONAL ITEMS
H1 TERMINATION CHARGE (74) -
H2 SET-UP COSTS (9) -
ANNUAL AMORTISATION CHARGE - (15)
* INTEREST INCOME REDUCED BY C.£1M IN FULL YEAR
4343
DRIVE OUTPERFORMANCE IN REVENUE GROWTH AND MODEST
IMPROVEMENT IN RETAIL/WHOLESALE OPERATING MARGIN FROM 17.1% BASE,
with improvement in h2
4444
OUTLOOK
FY 2014 Further modest retail/wholesale operating margin improvement from 17.1% base
RETAIL Low to mid single-digit percentage growth in retail revenue from net new openings in FY 2014
WHOLESALE About 10% underlying decline in H1 excluding Beauty
LICENSING Slightly positive growth at constant FX in FY 2014 excluding Beauty– Broadly unchanged at reported FX
INTEREST Broadly neutral in FY 2014
DEPRECIATION About £140m in FY 2014
UNDERLYING TAX RATE c.25% for FY 2014
DIVIDEND POLICY About 40% full year payout based on adjusted diluted EPS
CAPITAL EXPENDITURE c.£200m in FY 2014
SEASONALITY Adjusted PBT in H1 currently expected to be lower than last year
4545
45
BEAUTY - OUR fifth Product division
4646
4747
Alessandro fabrini—
SVP licensing
4848
Under-penetrated in large markets
11% 11% 11% 11% 21%
2% 1% 1% 12%
MARKET SHARE OF TOP BRAND
MARKET SHARE OF BURBERRY1%
US FRANCE UK ITALY CHINA
SOURCE: BURBERRY ESTIMATES
//
PREMIUM FRAGRANCE MARKET SIZE (TOTAL €20BN)
4949
BENEFITS OF BRAND INTEGRATION
• MOST WIDELY ENCOUNTERED EXPRESSION OF BRAND– Opening price point– Millennial consumer– Brand media spend
• FULL ALIGNMENT– Marketing and PR– Fashion– Distribution– Infrastructure
5050
Stepping into Interparfums’ shoes
PRODUCT DEVELOPMENT
INVENTORY MANAGEMENT
SALES & DISTRIBUTOR MANAGEMENT
SOURCING
MARKETING AND PR
DESIGN
CREATIVE
BURBERRY
MANUFACTURING
DISTRIBUTOR NETWORK
LOGISTICS
THIRD PARTIES• REALLOCATION OF EXISTING BURBERRY TEAM– One-third of team are internal
• NEW TALENT SOURCED FROM ESTABLISHED BEAUTY OPERATORS
• LEVERAGE GROUP CAPABILITIES
5151
Engaging with OUR distributors
• CONTINUE TO OPERATE EXISTING DISTRIBUTION MODEL– Distributors in more than 100 markets– Top 15 distributors account for over 50% of sales
• DISTRIBUTION AGREEMENT WITH BPI– Part of Shiseido– In US, France, Spain, travel retail
• DEVELOP A STRONG PARTNERSHIP– Beauty conference in February– Burberry Chat roll-out– Leverage regional infrastructure
• DEVELOP CHANNEL STRATEGY– Elevate department stores– Grow Travel Retail– Focus on differentiation
5252
5353
SIMONA CATTANEO—
SVP Beauty
5454
Our ambition—
to make burberrya Worldwide
top ten beauty brand
5555
established position in fragrance
—distinctive offer
In make-up
Leveraging The best of beauty and the best of burberry
5656
ONE COMPANY, ONE BRAND—
BROAD CONSUMER APPEAL—
AUTHENTIC BRITISH HERITAGE BRAND
Burberry’s competitive advantage
5757
One company, one brand
5858
Broad consumer appeal
Digital Leadership
Target millennial consumer
5959
authentic British heritage brand
6060
6161
Elevate the image—
Prorsum: move forward—
Focus and agility
key beauty strategies
6262
ELEVATE THE IMAGE
6363
Innovative Breakthrough products
Disruptive communication
digital
unique selling experience
Prorsum: move forward
6464
pillar strategy
reduce time to market
Adopt fashion calendar
Focus and AGILITY
6565
Unique british positioning—
Elevate image—
OPTIMISE PRODUCT PORTFOLIO
KEY Fragrance strategies
6666
Unique positioning as British
fragrance house
6767
British perfumery has a story
That has never been told before
6868
Opulence
Classicism
Paris
French Art de vivre
Indoor
Floral Oriental
FRENCH perfumery
6969
heritage
eccentricity
London
Natural outdoor
freshness
herbal scents
British perfumery
7070
Scent expertise
raw materials
LUXURY POS STAGE
ELEVATE IMAGE
7171
OPTIMISE PRODUCT portfolio
7272
Establish icons
7373
7474
Number one line in portfolio
Intimate connection with Iconic trench coat
7575
7676
7777
Roberto canevari—
Chief supply chain officer
7878
• 40,000 REGULATORY DOCUMENTS • 9 MONTHS FOR CHINA REGISTRATION • 152 JURISDICTIONS
regulatory
Long lead time PRODUCT development
complex component-basedsourcing model
Intricate legal and regulatory landscape
GLOBAL synchronised LAUNCH TO thousands of POINTS OF SALE
Complex supply chain
7979
Organisation
—infrastructure
8080
Organisation
• ABOUT 30 TEAM MEMBERS
• PARTNERING INDUSTRY EXPERTISE WITH BURBERRY EXPERIENCE
• 10 NATIONALITIES
• 11 LANGUAGES
• DEDICATED REGULATORY AND QUALITY RESOURCES
8181
Infrastructure
• SUPPLIER BASE ENGAGED AND PRODUCTIVE
• SAP LIVE AND INTEGRATED
• GLOBAL HUB FULLY OPERATIONAL
• NEW PRODUCTS IN PROGRESS TO ENSURE NEWNESS IN THE MARKET
8282
More than 20M units of product ordered covering over
6 months of forecast demand
—
C. 2M UNITS live IN Distribution network
—
C. 1m LITRES OF FRAGRANCE currently IN
PRODUCTION
—
Produced over 6 months cover of body tender
8383
SCALABLE MODEL—
Drive agility & speed—
Elevate product execution—
fulfilment
8484
8585
Strong PERFORMANCE IN FY 2013—
UNLOCK GROWTH POTENTIAL IN BEAUTY, MENS AND DIGITAL
—Macro ENVIRONMENT uncertain
—Strong BRAND MOMENTUM,
PROVEN STRATEGIES
8686
8787
APPENDIX
8888
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 BurberryGroup 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.
8989
ADJUSTED MEASURES
All metrics and commentary in the this presentation exclude the results of the discontinued business in Spain and exceptional items, unless stated otherwise.
Exceptional items are: A charge of £82.9m relating to the termination of the fragrance and beauty licence relationship (2012: nil). A restructuring credit of £0.6m (2012: nil). A put option liability finance credit of £5.2m relating to the third party 15% economic interest in the Chinese business (2012:
charge of £10.2m).
Underlying change is calculated at constant exchange rates.
Certain financial data within this presentation have been rounded.
9090
Exchange rates
12 MONTHS TO 31 MARCH 2013 2012AVERAGE RATE
EURO 1.22 1.16
US DOLLAR 1.58 1.60
CHINESE YUAN RENMINBI 9.91 10.15
HONG KONG DOLLAR 12.25 12.38
KOREAN WON 1,758 1,775
YEN-HEDGED RATE 126.9 133.1
9191
IR CONTACTS
Kim Warren
Investor Relations Associate
Fay Dodds
Director of Investor Relations
Charlotte Cowley
Investor Relations Manager
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 & New Business Development Manager
