Burberry Group Plc · LSE:BRBY
Burberry — H1 FY25 Earnings Presentation
26 slides from Burberry's earnings presentation, Nov 14, 2024
Slide 1: Interim Results & Strategy Update
INTERIM RESULTS & STRATEGY UPDATE 14th November 2024 Private and Confidential 1 Opening Remarks 2 Financial Results 3 Strategy Update 4 Q&A 2
Slide 2: Summary of H1 FY25 Financial Performance
Private and Confidential 1 Opening Remarks 2 Financial Results 3 Strategy Update 4 Q&A 3 SUMMARY OF H1 FY25 FINANCIAL PERFORMANCE • Comparable retail sales -20% in Q2 and H1 • Total revenue -20% at CER and -22% reported • Adjusted operating loss £41m, with margin -3.4% CER, -3.8% reported, including
Slide 3: H1 FY25 Total Revenue vs LY and Regional Retail Comparable Sales
H1 FY25 | TOTAL REVENUE VS LY -22% -20% Total Retail (19%) £1,396m +1% (20%) +5% £1,114m £1,086m (29%) (2%) Revenue Retail comp Retail space Wholesale Licensing Revenue FX Revenue H1 FY24 H1 FY25 CER H1 FY25 Reported Note: Chart not to scale 5 H1 FY25 | REGIONAL RETAIL COMPARABLE SALES GROUP H1 (20%
Slide 4: H1 FY25 Summary Income Statement
H1 FY25 | SUMMARY INCOME STATEMENT H1 FY25 (£m) H1 FY24 (£m) Reported change (%) CER change (%) £m Revenue 1,086 1,396 (22) (20) Gross profit 689 975 (29) (28) Gross margin 63.4% 69.8% (640bps) (640bps) Adjusted operating (loss)/profit1 (41) 223 (119) (117) Adjusted operating margin1 (3.8%) 15.9% (1
Slide 5: H1 FY25 Free Cash Flow and Leverage; FY25 Outlook
H1 FY25 | FREE CASH FLOW AND LEVERAGE H1 FY25 H1 FY24 £m Adjusted operating (loss)/profit (41) 223 Depreciation and amortisation 199 179 Working capital (123) (154) Other including adjusting items 16 23 Cash generated from operating activities 51 271 Payment of lease principal and related cash flows
Slide 6: Near-Term Actions | Stabilising the Business
NEAR-TERM ACTIONS | STABILISING THE BUSINESS RESTORE SCARCITY TO INVENTORY MODEL • One-time actions in H2 FY25 to address inventory overhang • Tighter inventory buy going forward REDUCE OPEX RESTORE PROFITABILITY • Significant reassessment of our cost base with focus on rebuilding sustainable profit
Slide 7: Diagnostic | Our Underperformance Stems from Several Factors
"My first few months have reaffirmed my belief that Burberry is an extraordinary luxury brand, quintessentially British, equal parts heritage and innovation." 13 DIAGNOSTIC | OUR UNDERPERFORMANCE STEMS FROM SEVERAL FACTORS BRAND EXPRESSION SEASONAL FASHION EMPHASIS NICHE AESTHETIC Modern at the excl
Slide 8: Our Original Purpose Is More Relevant Than Ever
OUR ORIGINAL PURPOSE IS MORE RELEVANT THAN EVER… Burberry is the only luxury brand founded on the principle that clothing should protect people from the weather Warmth / Protection / Innovation / Exploration 15 WHY I AM OPTIMISTIC | BURBERRY SHARES THE SAME ATTRIBUTES AS SUCCESSFUL LUXURY BRANDS Ori
Slide 9: Customer | Burberry Is a Luxury Brand with Broad Universal Appeal
17 CUSTOMER | BURBERRY IS A LUXURY BRAND WITH A BROAD UNIVERSAL APPEAL "We will love the customer we have as much as the customer we want to have.” 18 18
Slide 10: Universal Appeal | Relevant to a Broad Range of Luxury Customers
UNIVERSAL APPEAL | WE ARE RELEVANT TO A BROAD RANGE OF LUXURY CUSTOMERS Priority segments TARGET SEGMENTS OPINIONATED INVESTOR CONSERVATIVE HEDONIST ASPIRING WHO ARE Fashion leader who combines Mature, high spending, brand Reserved customer who seeks High spending extrovert Occasional luxury shopper
Slide 11: Burberry Forward | Timeless British Luxury
BURBERRY FORWARD OUR STRATEGY TO DELIVER SUSTAINABLE VALUE CREATION 1 TI M ELE SS B R I TI SH LUX UR Y Juxtaposition of heritage and innovation PLACE C USTOM E R AT THE CENTRE OF 2 LE A D WI TH OUTE R WE A R Earn authority in other categories; fewer bigger ideas 3 EVERYTHING WE DO A LI G N DI STR I
Slide 12: Brand | Timeless British Luxury
BRAND | TIMELESS BRITISH LUXURY JUXTAPOSITION OF HERITAGE AND INNOVATION ACROSS ALL CONSUMER TOUCHPOINTS From: To: November 2023 | Spring November 2023 | Spring October | It’s Always October | It’s Always Campaign 2024 Campaign 2024 Burberry Weather 2024 Burberry Weather 2024 September 2023 | Social
Slide 13: Brand | Timeless British Luxury
BRAND | TIMELESS BRITISH LUXURY JUXTAPOSITION OF HERITAGE AND INNOVATION ACROSS ALL CONSUMER TOUCHPOINTS From: To: Festive 23 campaign Festive 24 campaign 25 26
Slide 14: Product | Lead with Outerwear
BURBERRY FORWARD OUR STRATEGY TO DELIVER SUSTAINABLE VALUE CREATION 1 TI M ELE SS B R I TI SH LUX UR Y Juxtaposition of heritage and innovation PLACE C USTOM E R AT THE CENTRE OF 2 LE A D WI TH OUTE R WE A R Earn authority in other categories; fewer bigger ideas 3 EVERYTHING WE DO A LI G N DI STR I
Slide 15: Product | Outerwear as Our Core; Scarves Our Superpower
PRODUCT | LEAD WITH OUTERWEAR; EARN AUTHORITY IN OTHER CATEGORIES OUTERWEAR SCARVES READY-TO-WEAR LEATHER GOODS SHOES CHILDRENSWEAR Go-to children’s brand, Lead with Outerwear, Hero Scarves Drive RTW, complementing Complete wardrobing by earning authority in Leather increase visibility and building
Slide 16: Product | Align Pricing to Category Authority
PRODUCT | ALIGN PRICING TO CATEGORY AUTHORITY IN A LUXURY CONTEXT OUTERWEAR READY-TO-WEAR BAGS SHOES • Stretch pyramid up with uber luxe leather, suede, cashmere and novelty • Strengthen commercial offer • Reset offer starting with Autumn 2025 • Tighten and rebalance offer with • Reset opening price
Slide 17: Product | Fewer Bigger Ideas; Product Authority
PRODUCT | FEWER BIGGER IDEAS; PRODUCT AUTHORITY Price architecture aligned to category authority Fewer, bigger investments Strong and commercial SKU discipline 33 BURBERRY FORWARD OUR STRATEGY TO DELIVER SUSTAINABLE VALUE CREATION 1 TI M ELE SS B R I TI SH LUX UR Y Juxtaposition of heritage and inno
Slide 18: Distribution | Align Distribution with Product & Customer Strategy
DISTRIBUTION | STRONG GLOBAL NETWORK OF STORES WITH EXCELLENT LOCATIONS NEW BOND ST, LONDON EAST 57TH STREET, NEW YORK SANLITUN, BEIJING Focus on driving prominence, productivity and profitability 35 DISTRIBUTION | ALIGN DISTRIBUTION WITH PRODUCT & CUSTOMER STRATEGY PROMINENCE, PRODUCTIVITY AND PROF
Slide 19: Distribution | Improving E-Commerce Experience
DISTRIBUTION | IMPROVING E-COMMERCE EXPERIENCE HOMEPAGE PRODUCT STYLING SCARVES TRY-ON From To From To Styling for broad range Driving innovation to Improved product visibility and storytelling of luxury consumers support our key categories 37 BURBERRY FORWARD OUR STRATEGY TO DELIVER SUSTAINABLE VAL
Slide 20: People | Reignite a High-Performance Culture
PEOPLE | REIGNITE A HIGH-PERFORMANCE CULTURE Design CREATIVE AND COMMERCIAL ALCHEMY Merchandising Marketing 39 PEOPLE | REIGNITE A HIGH-PERFORMANCE CULTURE ORGANISATIONAL CLARITY CORE CAPABILITIES EXECUTIONAL DISCIPLINE 40
Slide 21: People | Strengthened Leadership; ESG Commitment
PEOPLE | STRENGTHENED LEADERSHIP Jonathan Kiman Paul Price Laura Dubin-Wander Chief Marketing Officer Chief Product Merchandising and President, Americas Planning Officer 41 ESG | WE WILL MAINTAIN OUR STEADFAST COMMITMENT TO ACTING RESPONSIBLY PRODUCT PLANET PEOPLE COMMUNITIES Responsible Become net
Slide 22: Summary | Moving at Pace to Execute and Deliver
SUMMARY | MOVING AT PACE TO EXECUTE AND DELIVER SUSTAINABLE VALUE CREATION PLA CE C U S T O M E R A T THE CENTR E OF E VE R YTHING W E DO BURBERRY FORWARD Near-term Mid-term 1 TIME LE SS BRITISH LUXURY STABILISE THE BUSINESS SUSTAINABLE PERFORMANCE 2 LE A D W ITH OUTE RW E AR • Restore Profitability
Slide 23: Appendix | Disclaimer
APPENDIX DISCLAIMER The financial information contained in this presentation is unaudited. Certain statements made in this announcement 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 res
Slide 24: Alternative Performance Measures
ALTERNATIVE PERFORMANCE MEASURES Alternative performance measures (APMs) are non-GAAP measures. The Board uses the following APMs to describe the Group’s financial performance and for internal budgeting, performance monitoring, management remuneration target setting and external reporting purposes.
Slide 25: Alternative Performance Measures; FY25 Financial Outlook
ALTERNATIVE PERFORMANCE MEASURES APM Description and purpose GAAP measure reconciled to Net Debt Net debt is defined as the lease liability recognised Cash net of overdrafts: on the balance sheet plus borrowings less cash net of overdrafts. Period ended As at 28 September As at 30 September £m 2024
Slide 26: Investor Relations Contacts
INVESTOR RELATIONS CONTACTS REPORTING CALENDAR LAUREN WU LENG Q3 Trading Update 24 January 2025 Head of Investor Relations lauren.wuleng@burberry.com Horseferry House Horseferry Road RHIAN POWELL London Investor Relations Analyst SW1P 2AW rhian.powell@burberry.com Tel: +44 (0)20 3367 3524 investor.r