Burberry Group Plc · LSE:BRBY
Burberry — H1 FY2024 Earnings Presentation
32 slides from Burberry's earnings presentation, Nov 16, 2023
Slide 1: Interim Results
INTERIM RESULTS 16 November 2023 Jonathan Akeroyd Chief Executive Officer
Slide 2: Agenda and Opening Remarks
Agenda Opening Remarks Business Update Financial Results Q&A OPENING REMARKS • Solid half-year performance • Significant progress on strategic plan, and positive customer response to new brand identity and products • Slowdown in global luxury demand impacting FY24 guidance • Confirming £4bn revenue
Slide 3: Strong progress across all elements of our plan
MODERN BRITISH LUXURY WE HAVE MADE STRONG PROGRESS ACROSS ALL ELEMENTS OF OUR PLAN MODERN BRITISH LUXURY BRING ALL PRODUCT HARNESS THE POWER CATEGORIES TO FULL STRENGTHEN DISTRIBUTION OF OUR BRAND POTENTIAL OPERATIONS VALUE CHAIN EXCELLENCE OPERATIONAL ROADMAP INSPIRED PEOPLE & TALENT VALUES & SUSTA
Slide 4: Brand: Winter campaign with Britishness at its core
Business Update BRAND LAUNCHED WINTER 23 CAMPAIGN, SHOWCASING OUR NEW BRAND AESTHETIC, WITH BRITISHNESS AT ITS CORE…
Slide 5: Focus on key categories, amplified by global press
…AND A FOCUS ON KEY CATEGORIES Change image 9 VISIBILITY AMPLIFIED BY GLOBAL PRESS COVERAGE
Slide 6: Brand aesthetic deployed across consumer touchpoints
BRAND AESTHETIC AND STORYTELLING CONSISTENTLY DEPLOYED ACROSS CONSUMER TOUCHPOINTS… W23 CAMPAIGN BOND STREET FLAGS BOND STREET STORE WINDOW …INCLUDING A NEW BURBERRY.COM 12
Slide 7: Key markets activated through strategic 360 campaigns
KEY MARKETS ACTIVATED THROUGH STRATEGIC 360 CAMPAIGNS | LONDON BOND ST. STATION TAKEOVER BLACK CAB WRAPPING NORMAN’S CAFÉ POP-UP KEY MARKETS ACTIVATED THROUGH STRATEGIC 360 CAMPAIGNS | SEOUL SEONGSU ROSE IMMERSIVE POP-UP SEONGSU BOTTLE MICRO POP-UP JUN JI-HYUN & DANIEL LEE AT LAUNCH EVENT
Slide 8: Significantly improved brand clarity
KEY MARKETS ACTIVATED THROUGH STRATEGIC 360 CAMPAIGNS | SHANGHAI BURBERRY ROSE IMMERSIVE POP-UP SHANGHAI BUS WRAPPING TANG WEI AT LAUNCH EVENT SIGNIFICANTLY IMPROVED BRAND CLARITY, AFFIRMING BRITISH LUXURY STATUS HIGHEST BRAND CLARITY IN THREE YEARS… …DRIVEN BY TWO CORE BRAND ASSOCIATIONS Q2 FY22-24
Slide 9: Growing top client base, increasing brand momentum
GROWING TOP CLIENT BASE CUMULATIVE NUMBER OF TOP CLIENTS, H1 FY24 +DD FY23 H1 FY24 H1 17 INCREASING BRAND MOMENTUM LYST INDEX HOTTEST BRANDS, BURBERRY RANK VOGUE BUSINESS INDEX, BURBERRY RANK Q3 2023: #10 +4 Spring/Summer #6 +4 +1 2023: Q2 2023: #14 Q1 2023: #15 +3 Winter 2022/23: #10 Q4 2022: #18 N
Slide 10: Summer 24 campaign and broader talent presence
SUMMER 24: AN EXPLORATION OF LIGHTNESS, SENSUALITY, BEAUTY AND ELEGANCE 19 …WITH A SIGNIFICANTLY BROADER TALENT PRESENCE… Kylie Minogue Rachel Weisz Kano Jodie Comer Skepta Jun Ji-Hyun Eberechi Eze Qi Xi Jourdan Dunn Bukayo Saka Jessie Buckley Gabrielle Union Son Heung-min Rosie Huntington- Michael
Slide 11: Strong customer engagement; brand execution priorities
…CONTRIBUTING TO STRONG CUSTOMER ENGAGEMENT SS24 SHOW PRESS COVERAGE SS24 SHOW VIEWS ON ORGANIC SS24 SHOW VIEWS ON ORGANIC REACH1 SOCIAL (GLOBAL PLATFORMS2) SOCIAL (CHINA PLATFORMS3) # # # >2x >2.5x >8x AW23 SS24 AW23 SS24 AW23 SS24 1. Press coverage within one week of SS24 show | 2. Including Insta
Slide 12: Execution priorities: Customer
EXECUTION PRIORITIES | CUSTOMER Gender Generation1 Top clients New customers Repurchase Rate Database records (customers and % of customers that repurchase Other prospects) within 12 months of a purchase Gen Z Top clients Men Gen X FROM Women (Today)… Millennial +40% +30% Gen X Top TO Men clients Ge
Slide 13: Sustained growth of core categories in H1
SUSTAINED GROWTH OF CORE CATEGORIES IN H1 LEATHER GOODS OUTERWEAR +21% +8% H1 FY23 H1 FY24 H1 FY23 H1 FY24 High-single digit growth across category, fuelled by Double-digit growth across category, driven by continued double-digit growth in Bags outperformance of Heritage Rainwear Note: Growth rates
Slide 14: Knight bag styled by VIPs; elevated outerwear
LEATHER GOODS | KNIGHT BAG STYLED BY VIPS & INFLUENCERS ACROSS MARKETS Dua Lipa Sonam Kapoor Jean Campbell Temiloluwa Anne Thong Gabrielle Union-Wade Neneh Cherry Chen Kun Bright Vachirawit Son Heung Min OUTERWEAR | ELEVATED OUTERWEAR RESONATING WITH CUSTOMERS ACROSS REGIONS HERITAGE RAINWEAR W23 OU
Slide 15: Broadening our shoe offer
SHOES | BROADENING OUR SHOE OFFER, STARTING WITH W23 COLLECTION 29 W23 NEW PRODUCT | FOCUS ON EXECUTION WITH LARGER VISIBILITY ACROSS NETWORK W23 COLLECTION DISTRIBUTION VS W221 % Share of stores 100% 25% W22 W23 1. Based on Womenswear distribution 30
Slide 16: Summer 2024 collection and Goddess perfume launch
BUILDING ON THIS MOMENTUM WITH SUMMER 2024 COLLECTION LEATHER GOODS SHOES READY-TO-WEAR 31 SUCCESSFUL LAUNCH OF NEW GODDESS PERFUME
Slide 17: Execution priorities: Product
EXECUTION PRIORITIES | PRODUCT Accelerate visibility and growth of accessories: • Hero new women’s bag pillars and further develop the offer • Continue to expand core commercial shoe offer • Celebrate and re-energise softs Protect outerwear and update rainwear with the new aesthetic Complete assortm
Slide 18: Progress across distribution pillars
PROGRESS ACROSS DISTRIBUTION PILLARS Front of a newly refurbished / opened store Placeholder – picture of an impressive storefront MARKETS RETAIL STORES E-COMMERCE Solid growth across EMEIA and Asia Store refurbishment on track to reach New visual identity and enhanced Pacific target of >50% stores
Slide 19: Store refurbishments: Bond Street, Omotesando
STORE REFURBISHMENTS BOND STREET, 37 LONDON STORE REFURBISHMENTS OMOTESANDO, TOKYO
Slide 20: Store refurbishments: Rodeo Drive; W23 activations
STORE REFURBISHMENTS RODEO DRIVE, LOS ANGELES W23 COMMERCIAL ACTIVATIONS W23 SAKS WINDOW TAKEOVER, NEW YORK
Slide 21: Execution priorities: Distribution
EXECUTION PRIORITIES | DISTRIBUTION Replace Complete store refurbishments, integrating Daniel’s vision, and new openings in strategic locations Deliver productivity uplift through acceleration of accessories and targeted recruitment and retention of top clients Strengthen e-commerce experience and p
Slide 22: Operations: key priorities for efficiency; responsibility
OPERATIONS | KEY PRIORITIES TO DRIVE EFFICIENCY AND EFFECTIVENESS H1 HIGHLIGHTS Clear leadership across all teams Delivered efficiency improvements Completed acquisition of the outerwear across value chain development division of Pattern EXECUTION PRIORITIES Unlock speed, quality and Adapt operation
Slide 23: Summary of H1 FY24 performance
Financial Results Kate Ferry Chief Financial Officer SUMMARY OF H1 FY24 PERFORMANCE • H1 FY24 retail comparable sales growth +10% at CER • Total revenue growth +7% at CER and +4% reported • Adjusted operating profit margin -110bps at 16.6% CER, 15.9% reported • Adjusted EPS growth +2% at CER, -5% re
Slide 24: H1 FY24 income statement and revenue growth
H1 FY24 | INCOME STATEMENT Period ended H1 FY24 H1 FY23 Reported change CER change £m £m % % Revenue 1,396 1,345 4% 7% Gross profit 975 942 3% 8% Gross margin % 69.8% 70.1% (30bp) 30bp ADJUSTED Adjusted operating profit 223 238 (6%) 1% Adjusted operating profit margin 15.9% 17.7% (180bp) (110bp) Adj
Slide 25: Regional comparable sales and adjusted operating profit margin
H1 FY24 | REGIONAL RETAIL COMPARABLE SALES GROWTH GROUP H1 +10% Q1 +18% Q2 +1% EMEIA ASIA PACIFIC H1 +14% H1 +18% AMERICAS Q1 +17% Q1 +36% H1 -9% Q2 +10% Q2 +2% Q1 -8% Mainland China Q2 -10% H1 +15% Q1 +46% Q2 -8% FY23 Total Retail Sales Americas 23% Asia Pacific 49% EMEIA 28% Note: Comp - Comparabl
Slide 26: Free cash flow and leverage
H1 FY24 | FREE CASH FLOW AND LEVERAGE H1 FY24 H1 FY23 £m £m Adjusted operating profit 223 238 Depreciation and amortisation 179 163 Working capital (154) (125) Other 23 13 Cash generated from operating activities 271 289 Payment of lease principal and related cash flows (97) (93) Capital expenditure
Slide 27: Guidance and conclusion
GUIDANCE • Maintaining our medium-term guidance of £4bn revenue • If the weaker global luxury demand continues, we are unlikely to achieve our previously stated revenue guidance for FY24* • Adjusted operating profit expected to be towards the bottom of the current consensus range** • No change antic
Slide 28: Q&A / Appendix
Q&A APPENDIX
Slide 29: Disclaimer
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 results to d
Slide 30: Alternative Performance Measures
ALTERNATIVE PERFORMANCE MEASURES APM Description and purpose GAAP measure reconciled to Adjusted Profit Adjusted profit measures are presented to provide additional Reported Profit: consideration of the underlying performance of the Group’s A reconciliation of reported profit before tax to adjusted
Slide 31: FY24 Financial Outlook
FY24 | FINANCIAL OUTLOOK Retail space Space is expected to be broadly stable in FY24 REVENUE Wholesale revenue is expected to decline by a mid-single digit Wholesale percentage in FY24. PROFIT Tax rate We expect the adjusted effective tax rate to be around 27% Based on 25 October effective FX rates,
Slide 32: Analyst Consensus Estimates and IR Contacts
ANALYST CONSENSUS ESTIMATES The following consensus for Burberry Group plc was updated on 10 October 2023. This consensus reflects analyst expectations received between 26 September and 9 October 2023.* FINANCIAL YEAR ENDING MARCH 2024 *Note: Burberry is currently covered by 23 analysts. All 23 anal