Burberry Group plc · LSE:BRBY
Burberry — H1 2016 Earnings Presentation
19 slides from Burberry's earnings presentation, Nov 12, 2015
Slide 1: Interim Results for the Six Months Ended 30 September 2015
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015 1
Slide 2: Current Initiatives, Financial Review, Longer-term Opportunities, Questions
CHRISTOPHER BAILEY — CHIEF CREATIVE AND CHIEF EXECUTIVE OFFICER CURRENT INITIATIVES — FINANCIAL REVIEW — LongER-term opportunities — QUESTIONS 2
Slide 3: H1 performance
H1 performance ROBUST FINANCIAL PERFORMANCE IN H1 – Adjusted retail/wholesale profit up 5% underlying RETAIL COMPS SLOWED FROM UP 6% IN Q1 TO DOWN 4% IN Q2 AMERICAS: 26% UNCHANGED ASIA PACIFIC: 35% FOUR MACRO DRIVERS 6% DECLINE – Slowing spend from Chinese customers globally – Continued sector-wide
Slide 4: Driving productivity and efficiency
DRIVING Productivity and efficiency FOCUS ON PRODUCT, RETAIL AND PROCESSES COST EFFICIENCY – Action since July to deliver c.£20m of savings against plan in FY 2016 PRODUCTIVITY – Ongoing IT system upgrade – Single pool of inventory – Move from three labels to one PLANS FOR FESTIVE FESTIVE CAMPAIGN L
Slide 5: Financial Highlights
CAROL FAIRWEATHER — CHIEF FINANCIAL OFFICER FINANCIAL HIGHLIGHTS CHANGE SIX MONTHS TO 30 SEPTEMBER 2015 2014 UNDERLYING REPORTED £M £M FX REVENUE 1,105 1,100 0% 0% ADJUSTED PBT 152.9 152.3 3% 0% ADJUSTED DILUTED EPS 26.0p 25.4p 2% NET CASH 459 307 DIVIDEND PER SHARE 10.2p 9.7p 5% 5
Slide 6: Revenue unchanged: retail, wholesale, licensing
REVENUE UNCHANGED £1,100m £2m £18m (£9m) (£6m) £1,105m H1 2014 EXCHANGE RETAIL WHOLESALE LICENSING H1 2015 RATES REVENUE REVENUE UNCHANGED RETAIL – 70% of revenue – 2% underlying growth; up 3% at reported FX – Comparable sales up 1% (Q1: up 6%; Q2: down 4%) – Opened 13 mainline stores – Digital outp
Slide 7: Hong Kong
HONG KONG RETAIL EQUATION KEY DRIVERS IN H1 For illustrative purposes only HONG KONG – key actions INTENSE FOCUS ON – Product – Customer service – Marketing TIGHT CONTROL OF COSTS – Rent – Retail headcount MARKET STILL HIGH MARGIN – All stores profitable PACIFIC PLACE, HONG KONG 7
Slide 8: Adjusted operating profit up 2% underlying
ADJUSTED OPERATING PROFIT UP 2% UNDERLYING £6.5m (£3.5m) (£3.5m) £152.2m £151.7m H1 2014 RETAIL/WHOLESALE LICENSING EXCHANGE H1 2015 RATES ADJUSTED OPERATING PROFIT RETAIL/WHOLESALE PROFIT UP 5% UNDERLYING £30m (£23m) £130m £124m (£1m) H1 2014 EXCHANGE PRP REDUCTION UNDERLYING H1 2015 RATES ADJUSTED
Slide 9: Retail/wholesale profit: gross margin up 100 bps to 68.7%
RETAIL/WHOLESALE PROFIT SIX MONTHS TO 30 SEPTEMBER 2015 2014 £M £M CHANGE RETAIL/WHOLESALE REVENUE 1,078.4 1,065.3 1% GROSS MARGIN 740.5 720.5 AS % OF REVENUE 68.7% 67.7% 100bp OPERATING EXPENSES (610.8) (596.2) AS % OF REVENUE (56.7%) (56.0%) (70bp) ADJUSTED OPERATING PROFIT 129.7 124.3 4% AS % OF
Slide 10: Japan Licensing revenue
Japan Licensing revenue £53m (£2m) (£10m) (£16m) £25m (£15m) £10m FY 2015 EXCHANGE RATES H1 H2 FY 2016E FY 2017E REVENUE LICENSING SIX MONTHS TO 30 SEPTEMBER 2015 2014 £M £M REVENUE 26.1 34.7 GROSS MARGIN AT 100% 26.1 34.7 OPERATING EXPENSES (4.1) (6.8) OPERATING PROFIT 22.0 27.9 OPERATING MARGIN 84
Slide 11: Income statement
INCOME STATEMENT SIX MONTHS TO 30 SEPTEMBER 2015 2014 £M £M ADJUSTED OPERATING PROFIT 151.7 152.2 NET FINANCE INCOME 1.2 0.1 ADJUSTED PROFIT BEFORE TAX 152.9 152.3 ADJUSTING ITEMS 1.8 (10.5) PROFIT BEFORE TAX 154.7 141.8 TAX (33.7) (33.4) NON-CONTROLLING INTEREST (1.5) (3.9) ATTRIBUTABLE PROFIT 119.
Slide 12: Cash inflow from operations and inventory management
CASH INFLOW FROM OPERATIONS SIX MONTHS TO 30 SEPTEMBER 2015 2014 £M £M ADJUSTED OPERATING PROFIT 151.7 152.2 DEPRECIATION AND AMORTISATION 63.1 58.7 EMPLOYEE SHARE SCHEME COSTS 3.3 16.6 (INCREASE) IN INVENTORIES (42.9) (62.1) (INCREASE) IN RECEIVABLES (2.1) (33.9) INCREASE/(DECREASE) IN PAYABLES (8.
Slide 13: Movement in net cash
MOVEMENT IN NET CASH £167m (£80m) (£56m) (£112m) £552m (£12m) £459m MAR 2015 OPERATING CAPITAL TAX DIVIDENDS OTHER SEPT 2015 CASHFLOW EXPENDITURE MOVEMENT IN NET CASH SIX MONTHS TO 30 SEPTEMBER 2015 2014 £M £M CASH INFLOW FROM OPERATIONS 167.4 149.3 CAPITAL EXPENDITURE (80.1) (73.0) NET INTEREST 1.7
Slide 14: FY 2016 Outlook
CHALLENGING ENVIRONMENT — EXECUTING OUR STRATEGIES TO DELIVER SUSTAINABLE PROFITABLE GROWTH FY 2016 OUTLOOK RETAIL Low single-digit % growth in retail revenue from net new space WHOLESALE Broadly unchanged at constant FX in H2 – Apparel and accessories down mid single-digit % – Beauty up double-digi
Slide 15: Looking forward
CHRISTOPHER BAILEY — CHIEF CREATIVE AND CHIEF EXECUTIVE OFFICER LOOKING FORWARD FUNDAMENTALS OF LUXURY INDUSTRY ARE CHANGING – Our goal is to outperform STRONG BRAND MOMENTUM – Grounded in iconic products; made in the UK • Early success from Scarf Bar • Plans for new trench coat manufacturing and we
Slide 16: Growth opportunities
Growth opportunities BY CHANNEL – Improve retail disciplines to drive retail productivity – Use customer insight to drive loyalty and conversion – Build on leadership position in digital BY REGION – Japan – United States BY PRODUCT – Leather goods – Outerwear – Beauty SHINJUKU, TOKYO 16
Slide 17: Appendix: Disclaimer
APPENDIX 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-l
Slide 18: Adjusted measures
ADJUSTED MEASURES All metrics and commentary in this presentation are at reported FX and exclude adjusting items unless stated otherwise. Adjusting items are: A charge of £7.5m in reported operating expenses being the amortisation of the fragrance and beauty licence intangible asset (2014: £7.5m)
Slide 19: IR Contacts
IR CONTACTS Fay Dodds Horseferry House VP, Investor Relations Horseferry Road fay.dodds@burberry.com London SW1P 2AW Charlotte Cowley Tel: +44 (0)20 3367 3524 Director of Investor Relations charlotte.cowley@burberry.com www.burberryplc.com www.twitter.com/burberrycorp Bryony Dimmer www.burberry.com