Burberry Group Plc · LSE:BRBY
Burberry — FY2021 Earnings Presentation
40 slides from Burberry's earnings presentation, May 13, 2021
Slide 1: Burberry Preliminary Results 2021
BURBERRY LONDON ENGLAND PRELIMINARY RESULTS 2021 13 MAY 2021 BURBERRY PRELIMINARY RESULTS 2021 AGENDA FOR TODAY 09:30-09:45 Building the new Burberry Marco Gobbetti 09:45-10:00 The next chapter: Growth Acceleration Marco Gobbetti 10:00-10:20 Financial results Julie Brown 10:20-11:00 Marco Gobbetti /
Slide 2: Building the New Burberry
BUILDING THE NEW BURBERRY MARCO GOBBETTI (CHIEF EXECUTIVE OFFICER) IN AN EXCEPTIONAL YEAR, WE HAVE FOCUSED ON THE IMMEDIATE PRIORITIES PRIORITISED THE SAFETY AND WELLBEING OF OUR COLLEAGUES, PARTNERS AND CUSTOMERS CONTRIBUTED TO THE RELIEF EFFORTS TO SUPPORT OUR COMMUNITIES GLOBALLY CONTINUED TO CRE
Slide 3: In 2017 we announced our vision for Burberry
IN 2017 WE ANNOUNCED OUR VISION FOR BURBERRY High price LUXURY HERITAGE FASHION LUXURY —— ® BURBERRY OUR VISION CONTEMPORARY Cox? Firmly establish our position in luxury fashion, inspiring customers with our unique British attitude ACCESSIBLE LUXURY Low price Fashion Heritage forward TWO PHASES TO A
Slide 4: In the last three years we have transformed the business
In the last three years we have transformed the business COMMUNICATIONS OUR OBJECTIVES “We will re-energise thebrand, by placing product at the heart of our IN 2017 communications, reimagining content with a curated, edited approach, and investing in meaningful experiences” ——_ |e WHAT WE HAVE + Com
Slide 5: Completely redefined our brand image and renewed all touchpoints
COMPLETELY REDEFINED OUR BRAND IMAGE AND RENEWED ALL TOUCHPOINTS FROM TO BURBERRY BURBERRY Lender, Eiaglard LONDON ENGLAND 4 = WORDMARK WORDMARK TB MONOGRAM AD CAMPAIGNS AD CAMPAIGN UNEXPECTED VISIBILITY SOCIAL MEDIA INFLUENCERS. EDITORIALS INCREASED VISIBILITY AND ENGAGEMENT, PARTICULARLY ON SOCIAL
Slide 6: Renewing our product
OUR OBJECTIVES “We will renew our product, by increasing fashion content, injecting IN 2017 newness and transforming, leather goods” hy Oe WHAT WE HAVE * Transitioned ready to wear toa new, elevated fashion offer ACHIEVED + Established leather goods architecture * Diversified outerwear offer + Rebui
Slide 7: Completely rebuilt the leather goods architecture
COMPLETELY REBUILT THE LEATHER GOODS ARCHITECTURE FROM: TOP 3 BAGS IN FY18 (RRP) TO: NEW LEATHER GOODS ARCHITECTURE (RRP) RUCKSACK (£950) TB BAG (£1690) POCKET (£990) TITLE (€1590) BANNER (£1190) BUCKLE TOTE (£975) LOLA (£1390) OLYMPIA (£1490) RESULTING IN STRONG GROWTH IN OUR CORE CATEGORIES, AND A
Slide 8: Distribution
DISTRIBUTION OUR OBJECTIVES “We will transform the experience, by reducing exposure to non-luxury IN 2017 channels, building a luxury network in line with our brand, upgrading our stores and transforming the in-store experience” WHAT WE HAVE Reset distribution — rationalised non-luxury wholesale and
Slide 9: Upgraded our stores look and feel in line with new brand vision
UPGRADED OUR STORES LOOK AND FEEL IN LINE WITH NEW BRAND VISION I tit PRaREDE BURBERRY MTT Te To Te SHANGHAI |APM SINGAPORE LOS ANGELES GINZA, TOKYO SHENZHEN BAY LEVERAGED OUR STRONG DIGITAL FOUNDATIONS TO DRIVE DIGITAL GROWTH DIGITAL FULL PRICE SALES DIGITAL, FULL PRICE REVENUE GROWTH, %YOY TD DD D
Slide 10: We have built a new Burberry
We have built a new Burberry BURBERRY IS NOW ANCHORED IN LUXURY ... True Luxury Affordable 2020 BURBERRY LONDON ENGLAND 2017 BURBERRY Fashion forward Heritage 10
Slide 11: With a strong customer base
« WITH A STRONG CUSTOMER BASE NEW CUSTOMERS REPEAT CUSTOMERS CUSTOMER PROFILE + Full price sales from new + Full price sales from repeat customers + Balancedage mix in our customer profile improved to low double-di improved to mid double-digit growth * Good traction with young, fashion-forward custo
Slide 12: Across major luxury markets
«. ACROSS MAJOR LUXURY MARKETS. FULL PRICE PERFORMANCE IN CHINA AND AMERICAS: FULL PRICE REVENUE YOY GROWTH BY QUARTER (COMP STORES), % cy 2020 3D China Indust DD Be Avg! 128%" CHINA DD LNY FILM & CAPSULE. SOCIAL RETAIL = STORE, TMALL SUPER BRAND DAY DD DD AMERICAS DD cy 2020 DD Americas Industry Av
Slide 13: The Next Chapter: Growth Acceleration
We are now successfully through our transformation, and into the next chapter -THENEXT CHAPTER: GROWPH ACCELERATION MARCO GOBBETTI — al = {CHIEF EXEC UTIMESOEEIC 73
Slide 14: In this next chapter, we will leverage our unique brand
In this next chapter, we will leverage our unique brand to deliver significant value creation IN THIS NEXT PHASE, WE WILL LEVERAGE OUR UNIQUE BRAND TO DELIVER HIGH-QUALITY GROWTH AND POSITIVE CHANGE BRAND REVENUE PROFIT AND CASH POSITIVE CHANGE Revenue acceleration, driven by Meaningful expansion, w
Slide 15: Burberry is a unique brand
BURBERRY IS A UNIQUE BRAND GROUNDED IN THE FOUNDING PRINCIPLES OF THOMAS BURBERRY AND TRUE TO OUR RICH HERITAGE A TRUE LUXURY BRAND UPHOLDING OUR FROM BRITAIN, TO THE IN THE OUTDOORS UNEXPECTED WITH PURPOSE-DRIVEN SUSTAINABLE AND BEYOND INNOVATORS VALUES, INSPIRED BY HERITAGE OUR FOUNDER WHAT WE WAN
Slide 16: Revenue: we will drive revenue through key levers
REVENUE: WE WILL DRIVE REVENUE THROUGH 5 KEY LEVERS 1. BUILD BRAND ADVOCACY AND COMMUNITY 2. FOCUS ON CORE CATEGORIES 3. DRIVE STORE PERFORMANCE 4. SUPERCHARGE DIGITAL SALES 5. FOCUS ON FULL PRICE REVENUE; BUILD BRAND ADVOCACY AND COMMUNITY OUR AMBITION Excite and inspire the Fashion Vanguard, foste
Slide 17: Revenue: focus on core categories
OUR PLAN IN ACTION: OLYMPIA CAMPAIGN REVENUE: FOCUS ON CORE CATEGORIES OUR AMBITION Strong offer, anchored in Outerwear and Leather Goods OUR FOCUS FOR FY22-24 + Leather Goods + Outerwear Innovation + Luxury RTW * Shoes + Build on replenishment offer HOW THIS WILL DRIVE REVENUE GROWTH * Accelerate d
Slide 18: Revenue: drive store performance
—_ SURBERRY RI ; ;' Za, 2 / OUR PLAN IN ACTION: LE, IER GOODS POP-UP, — REVENUE: DRIVE STORE PERFORMANCE OUR AMBITION A luxury, omnichannel customer experience OUR FOCUS FOR FY22-24 + Roll-out new store concept/experience Omnichannel leadership, incl. social retail Scale and elevate appointments Foc
Slide 19: New store concept
NEW STORE CONCEPT SLOANE STREET, JUNE 2021 a "ies NEW STORE CONCEPT WILL BE ROLLED OUT AT PACE EMEIA APAC AMERICAS. 7 8 40 55 EXPECTED CONCEPT ROLL OUTS IN FY22 19
Slide 20: Revenue: supercharge digital sales
OUR AMBITION Remain the digital pioneer in luxury OUR FOCUS FOR FY22-24 HOW THIS WILL DRIVE REVENUE GROWTH REVENUE: SUPERCHARGE DIGITAL SALES Drive traffic and engagement through precision marketing Significantly scale customer recruitment through data Step change conversion through product assortme
Slide 21: Revenue: focus on full price
REVENUE: FOCUS ON FULL PRICE OUR AMBITION Overperformance in full price channels OUR FOCUS FOR FY22-24 Exit markdowns in Mainline stores in FY22 Focus on image-driving FP channels HOW THIS WILL DRIVE REVENUE GROWTH Strengthen brand image Increase AUR PROFIT: WE WILL DRIVE PROFIT THROUGH 5 KEY LEVERS
Slide 22: Enablers of our strategy
ENABLERS OF OUR STRATEGY AGILE SUPPLY CHAIN DELIVERING EXCEPTIONAL QUALITY AND SERVICE SECURE, INTEGRATED AND CONSUMER-LED TECHNOLOGY WORLD-CLASS TALENT OPERATIONAL EFFICIENCY DRIVING POSITIVE CHANGE: STRONG FOCUS ON ESG OUR PEOPLE OUR COMMUNITIES OUR ENVIRONMENT FUELLING CREATIVITY EMPOWERING YOUTH
Slide 23: Medium-term targets
WHAT WE WILL DELIVER IN THIS NEXT PHASE: MEDIUM-TERM TARGETS BRAND REVENUE PROFIT AND CASH POSITIVE CHANGE Revenve acceleration, driven by Meaningful expansion, while Positive change for our people, our full price investing in growth communities and our environment Significant free cash generation H
Slide 24: Financial performance and stability
ULIE BROWN | (CHIEF|OPERATING AND FINANC AL OFFICER) FINANCIAL PERFORMANCE AND STABILITY OUR OBJECTIVES “Broadly stable revenue and earnings for the first two years followed by ine aia the accelerate and growth phase “Cumulative cost savings of £120m by FY20” we WHAT WE HAVE Revenue and earnings sta
Slide 25: Comparable sales impact on revenue
Comparable sales Impact on revenue Strong full-price performance Continued markdown and outlet reduction Increased COVID-related store closures Continued pressure in tourist-dependent destinations 25
Slide 26: Q4 performance by region
Q4 Q4 FY21 FY21 v v Q4 Q4 FY19 FY19 At constant exchange rates Comp -44% Americas FP -40% APAC Comp +15% EMEIA Comp +17% FP +43% FP +21% Group Comp -5% FP +12% 26
Slide 27: Successfully navigated through COVID with enhanced revenue and earnings quality
H1 FY21 £1,281m -25% -4% -38% -24% £892m -1% £878m H2 FY21 £1,352m +5% +4% +7% -16% £1,466m flat £1,466m Successfully navigated through COVID with enhanced revenue and earnings quality 27
Slide 28: Income statement
INCOME STATEMENT . _ [a | Revenue 2,344 2,633 -11% -10% Gross profit 1,640 1,774 -8% -7% Gross margin % 70.0% 67.4% +260bp +270bp Operating expenses -1,244 -1,341 7% 7% Opex % sales 53.1% 51.0% +210bp +210bp Adjusted operating profit 396 433 -9% -8% Adjusted operating profit margin 16.9% 16.4% +50bp
Slide 29: Adjusted operating profit bridge
ADJUSTED OPERATING PROFIT BRIDGE £185m £64m £433m FY20 Trading GM rate Operating profit decline Reported Net cost savings of £87m YoY (-7%) £26m fim £60m Cost Property* Other reduction programme £399m, Operating profit FY21 CER £3m FX £396m, FY 21 Operating profit reported * Property savings include
Slide 30: Strong cash generation, working capital management and liquidity
Revenue Adjusted operating profit Free cash flow £1,466m £345m £394m £1,352m £1,281m £230m £878m £203m £95m £51m H1 FY20 H1 FY21 H2 FY20 H2 FY21 H1 FY20 H1 FY21 H2 FY20 H2 FY21 -£29m -£45m H1 FY20 H1 FY21 H2 FY20 H2 FY21 Strong cash generation, working capital management and liquidity in place 30
Slide 31: Cash and net debt movement
£464m -£115m Cash net of overdrafts -£4m -£13m -£300m £1,216m £297m Cash net of Bond overdrafts £297m £887m RCF Cash increase £300m £332m Cash net of Cash net of overdrafts & overdrafts & borrowings borrowings £587m £919m March 2020 FCF Capex Investment FX/Other RCF Bond March 2021 Pre Capex Repayme
Slide 32: Our capital allocation framework
OUR CAPITAL ALLOCATION FRAMEWORK 1 2 3 4 REINVEST FOR ORGANIC PROGRESSIVE DIVIDEND STRATEGIC RETURN EXCESS CASH GROWTH POLICY INORGANIC TO SHAREHOLDERS INVESTMENTS Maintain a strong balance sheet with a solid investment-grade credit rating Leverage currently stands at 0.1x and we plan to return to o
Slide 33: Revenue to grow at HSD leading to meaningful margin expansion
Revenue to grow at HSD percentage leading to meaningful margin expansion* Gross Margin Variable costs Consumer facing & Enabling cost areas ESG Investment Gross margin Rise in line with Incremental Enabling areas costs underpinned by sales investment tightly controlled to full-price strength enhance
Slide 34: Revenue CAGR on FY20 basis
• • • • • • • * Revenue CAGR on FY20 basis; all figures based on FY21 CER 34
Slide 35: 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 36: Alternative performance measures
ALTERNATIVE PERFORMANCE MEASURES APM Description and purpose GAAP measure reconciled to Reported Profit: Adjusted Profit Adjusted profit measures are presented to provide additionalconsideration _A reconciliation of reported profit before tax to adjusted profit of the underlying performance of the G
Slide 37: FY22 guidance
Markdowns We will be exiting markdowns in in mainline stores in FY22. This will lead to a headwind against our comparable store sales of mid-single digits in the full year with Q1 FY21 comp impacted by HSD REVENUE Wholesale H1 wholesale to increase by around 50% Retail space Expected to be broadly n
Slide 38: Foreign exchange rates and store portfolio
FOREIGN EXCHANGE RATES Euro 1.15 112 114 US Dollar 1.39 1.30 1.27 Chinese Renminbi 9.03 8.85 8.88 Hong Kong Dollar 10.82 10.08 9.89 Korean Won 1,545 1,514 1,504 STORE PORTFOLIO Stores Concessions Outlets Total At 28 March 2020 218 149 54 421 44 Additions nN 1 5 7 - Closures (15) (5) (3) (23) - At 27
Slide 39: FY 2021 Average 18% Q4 FY20 Q1 FY21
44% FY 2021 Average 18% 16% 14% 12% 7% 4% Q4 FY20 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Current 39
Slide 40: IR Contacts
IR CONTACTS Julian Easthope VP, Investor Relations julian.easthope@burberry.com Stephanie Crinnegan Director, Investor Relations stephanie.crinnegan@burberry.com Sophie Parker Investor Relations Coordinator sophie.parker@burberry.com 40