Burberry Group Plc · LSE:BRBY
Burberry — FY2019 Earnings Presentation
52 slides from Burberry's earnings presentation, 2019
Slide 1: Preliminary Results 2019
PRELIMINARY RESULTS 2019 AGENDA 1
Slide 2: Strong Progress in the Last Year
STRONG PROGRESS IN THE LAST YEAR Financial performance in line with guidance Promising early results from the transformation JULIE BROWN CHIEF OPERATING & FINANCIAL OFFICER 2
Slide 3: Two-Phased Transformation Journey
TWO-PHASED TRANSFORMATION JOURNEY FY 2019 AND FY 2020 BUILD THE FOUNDATION Re-energise the Burberry brand Rationalise and invest to align to luxury distribution Manage creative transition Broadly stable revenue and earnings for the first two years (CER) FY 2021 ONWARDS ACCELERATE AND GROW Complete f
Slide 4: FY 2019 Summary Financials
FY 2019 SUMMARY FINANCIALS Revenue 2,720 2,733 0% (1%) Revenue ex Beauty wholesale 2,720 2,660 2% 2% Adjusted operating profit 438 467 (6%) 0% g Adjusted operating margin 16.1% 17.1% (100bps) 10bps = Adjusted diluted EPS 82.1p 82.1p 0% 7% Free cash flow 301 484 Adjusted retail/wholesale ROIC 15.5% 1
Slide 5: Regional Retail Comparable Store Sales
REGIONAL RETAIL COMPARABLE STORE SALES + UK + MSD % + Cont Europe + LSD % * Mainland China + LSD % + US+LSD% + Hi: +3% + H2: +1% RETAIL & WHOLESALE REVENUE BY PRODUCT (EX BEAUTY WHOLESALE) FY 2019 FY 2018 YOY Growth YOY CER Reported Growth £2,674m £2,630m 2% 2% Accessories (3%) (3%) Womens Apparel 4
Slide 6: Income Statement
INCOME STATEMENT Revenue 2,720 2,733 0% (1%) Gross profit 1,861 | 68.4% 19897 | 691496 | (2%) Operating expenses (1,423) (1,430) (1%) Adjusted operating profit 438 16.1% 467 71% (6%) 0% Adjusting operating items (1) (57) Tax* (102) (119) Adjusted diluted EPS 82.1p 82.1p 0% 7% Reported diluted EPS 81
Slide 7: Movement in Net Cash
MOVEMENT IN NET CASH £411m (£171m) | (160m) (£10m) Reinvest for Progressive Strategic Return excess organic dividend flows to growth policy shareholders (Leather acquisition and BME) Capital allocation framework FY 2018 Net cash FCF pre capex Capex Dividend Strategic Share buyback Other FY 2019 Net
Slide 8: Optimising Our Retail Stores
OPTIMISING OUR RETAIL STORES New store openings aligned to new creative vision Store relocations to enhanced sites Space +1% in FY 20 Capital investment in stores doubling Store refurbishments in key locations Programme to enhance store service levels 38 retail store closures Space: -1% in FY 20 & F
Slide 9: FY 2020 Guidance
FY 2020 Revenue Retail Riccardo % of mainline and digital offer = Net contribution from retail space 1% +1% Wholesale -MSD -MSD Total Revenue Broadly stable at CER Gross margin Down around 100bps Cumulative cost savings £120m [ometnemon | Breet yee pesca Capex £200m DELIVERED FOUNDATIONAL STEPS RESU
Slide 10: Brand - Marco Gobbetti
MARCO GOBBETTI CHIEF EXECUTIVE OFFICER BRAND 10
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Slide 13: WY hx Ps ‘ N Y N { S VAS; mn ce aN
WY hx 4 Ps ‘ 2 N Y N { S VAS; mn ce aN 13
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Slide 15: Influencer Earned Media Value
INFLUENCER EARNED MEDIA VALUE SEP 18 SHOW FEB 19 SHOW 15
Slide 16: Press Reaction
PRESS REACTION FEB-MAR 18 FEB-MAR 19 16
Slide 17: Social Performance
“FOR HIS SECOND OUTING, CHIEF CREATIVE OFFICER RICCARDO TISCI TURNED OUT A TOUR DE FORCE: BOLD AND ALL-EMBRACING” – VOGUE.CO.UK SOCIAL PERFORMANCE 17
Slide 18: Product - Judy Collinson
PRODUCT JUDY COLLINSON CHIEF MERCHANDISING OFFICER 18
Slide 19: New Creative Vision, New Burberry Language
NEW CREATIVE VISION The first Runway SS19 was a defining moment NEW BURBERRY LANGUAGE 19
Slide 20: Icon Stripe, The Monogram
ICON STRIPE \\ at THE MONOGRAM 20
Slide 21: The Monogram Print, Wardrobing
THE MONOGRAM PRINT WARDROBING 21
Slide 22: Leather Goods Transition, Ready to Wear Transition
LEATHER GOODS TRANSITION READY TO WEAR TRANSITION 22
Slide 23: Pricing, Continuous Engagement
PRICING CONTINUOUS ENGAGEMENT 23
Slide 24: Riccardo's First Collection Results
MARCO GOBBETTI CHIEF EXECUTIVE OFFICER RICCARDO’S FIRST COLLECTION RESULTS SS18 SS19 24
Slide 25: Customers, Leather Goods
CUSTOMERS TOTAL BUSINESS SS19 LEATHER GOODS 25
Slide 26: Leather Goods, Supply Chain Innovation
LEATHER GOODS Leather goods evolution will take time Investing in product quality SUPPLY CHAIN INNOVATION Step-change in agility and efficiency Focus on quality Streamlining processes 26
Slide 27: Managing Inventory, Delivering Riccardo's Product
MANAGING INVENTORY Changed the way we buy Maximise new product Proactively manage previous collections DELIVERING RICCARDO’S PRODUCT Note: mainline and digital only 27
Slide 28: Retail
RETAIL 57TH STREET – NEW YORK 28
Slide 29: Montenapoleone - Milan, Faubourg - Paris
MONTENAPOLEONO - MILAN FAOUBOUR - PARIS 29
Slide 30: Spring Street - New York, Dubai
SPRING STREET – NEW YORK DUBAI 30
Slide 31: Kerry Centre - Shanghai, Omotesando - Tokyo
KERRY CENTRE - SHANGHAI OMETESANDO – TOKYO 31
Slide 32: Chengdam-don - Seoul
CHENGDAM-DON – SEOUL MORE THAN 80 STORES TO BE TRANSFORMED BY END OF FY 2020 32
Slide 33: Pop Up
POP UP ONE PAGE ISETAN ONE PAGE SKP, #S OF RETAIL AND WHOLESALE THIS YEAR AND PLANNED NEXT YEAR POP UP ONE PAGE ISETAN ONE PAGE SKP, #S OF RETAIL AND WHOLESALE THIS YEAR AND PLANNED NEXT YEAR 33
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‘ia 34
Slide 35: Wholesale
WHOLESALE 35
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Slide 39: Digital
US WHOLESALE DOORS DIGITAL 39
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Slide 41: Farfetch
FARFETCH 8 ACcESSONIES EWRLLERY waTAGE Burberry: new collection, new aesthetic, new era did T 41
Slide 42: Net-A-Porter
NET-A-PORTER eB Rage Sant BURBERRY MEN WOMEN SEARCH BURBERRY’S KINGDOM Photographer Suffo Moncloa Captures Riccardo Tisci’s Inaugural SS19 Burberry Collection for SSENSE | View EDITORIAL 42
Slide 43: Instagram & Influencer Checkout
INSTAGRAM & INFLUENCER CHECKOUT 43
Slide 44: People
PEOPLE PEOPLE Increased employee engagement Focus on leaders Diversity & inclusion 44
Slide 45: Our Sustainability Agenda
OUR SUSTAINABILITY AGENDA THE FIRST YEAR 45
Slide 46: The First Year, Looking Ahead
THE FIRST YEAR Brand relaunch Heat with press, influencers, wholesale partners and consumers Transformation in product aesthetic and quality, with encouraging early sales Evolution of store environment Continued innovation across the business LOOKING AHEAD 46
Slide 47: 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 48: Alternative Performance Measures
APM Description and purpose GAAP measure reconciled to Constant Exchange Rates (CER) This measure removes the effect of changes in exchange rates Results at reported rates compared to the prior period. It incorporates both the impact of the movement in exchange rates on the translation of overseas s
Slide 49: Alternative Performance Measures (continued)
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 profit ongoing business. These me
Slide 50: Foreign Exchange Rates, Adjusting Items
FOREIGN EXCHANGE RATES Euro 1.16 1.13 1.13 US Dollar 1.30 1.31 1.33 Chinese Yuan Renminbi 8.78 8.82 8.79 Hong Kong Dollar 10.23 10.26 10.37 Korean Won 1,520 1,460 4,473 Currency sensitivity: In FY 2019, a +/-5% move in sterling would have resulted in a-/+£45-50mimpact on the adjusted operating profi
Slide 51: Store Portfolio, UK Departure from the EU
STORE PORTFOLIO Stores Concessions Outlets Total At 31 March 2018 240 155 54 449 46 Additions " 5 1 7 - Closures (18) (14) (3) (35) (2) At 30 March 2019 233 146 52 431 44 Stores Concessions Outlets Total Asia Pacific 95 85 14 194 6 EMEIA 67 54 21 142 38 Americas 71 7 17 95 - Total 233 146 52 431 44
Slide 52: IR Contacts
“preliminary date IR CONTACTS Annabel Gleeson Head of Investor Relations annabel.gleeson@burberry.com Rachel Byrne Director, Investor Relations rachel.byrne@burberry.com Sophie Parker Investor Relations Coordinator sophie.parker@burberry.com 52