Burberry Group plc · LSE:BRBY
Burberry — H1 2012 Earnings Presentation
23 slides from Burberry's earnings presentation, Nov 15, 2011
Slide 1: Interim results for the six months ended 30 September 2011
Interim results FOR THE six months ENDED 30 September 2011 1 2 1
Slide 2: First half achievements
FINANCIAL REVIEW — Creative culture AND innovation SUSTAINING COMPETITIVE ADVANTAGE — QUESTIONS 3 First half achievements • RECORD FIRST HALF – Revenue up 30% to £830m – Adjusted PBT up 25% to £162m – Retail/wholesale operating margin 14.9% – £174m cash – Dividend up 40% to 7.0p • CONSISTENT MOMENTU
Slide 3: Revenue up 30%
REVENUE UP 30%* £42m £2m £830m £116m £30m £641m (£1m) H1 2010 EXCHANGE CHINA RETAIL WHOLESALE LICENSING H1 2011 RATES REVENUE * UNDERLYING 5 REVENUE UP 30%* • REVENUE UP 30% UNDERLYING – 25% excluding China – Double-digit growth in retail and wholesale, all regions and all product categories • RETAI
Slide 4: Retail revenue up 45%
RETAIL REVENUE UP 45%* £59m £528m £57m £51m £366m (£5m) H1 2010 EXCHANGE CHINA NEW COMP H1 2011 RATES SPACE STORE GROWTH REVENUE * UNDERLYING 7 RETAIL REVENUE UP 45%* • COMPARABLE STORE SALES UP 16% – Double-digit mainline comparable store sales growth in all four regions in Q2 – Acquired China stor
Slide 5: Capital expenditure: increased focus on flagship markets
Capital expenditure increased focus on flagship markets IT/OTHER: 30% RETAIL FLAGSHIPS: 30% RETAIL OTHER: 40% FY 2012 CAPITAL EXPENDITURE 9 Capital expenditure increased focus on flagship markets • CAPITAL EXPENDITURE REMAINS AT £180-200M IN FY 2012 – Focus on retail flagships • High demographic loc
Slide 6: Wholesale revenue up 9%
WHOLESALE REVENUE UP 9%* £42m £248m £226m £1m (£21m) H1 2010 EXCHANGE CHINA UNDERLYING H1 2011 RATES GROWTH REVENUE * UNDERLYING 11 WHOLESALE REVENUE UP 9%* • UP 20% EXCLUDING CHINA • GROWTH DRIVERS – Americas, Emerging Markets and Travel Retail – Shoes, childrenswear, men’s accessories and tailorin
Slide 7: Licensing revenue up 4%
LICENSING REVENUE UP 4%* £6m £54m £3m (£4m) £49m H1 2010 EXCHANGE NON - UNDERLYING H1 2011 RATES RENEWALS GROWTH REVENUE * UNDERLYING 13 LICENSING REVENUE UP 4%* • UP 11% AT REPORTED FX • CLEANING UP LEGACY ISSUES COST £4M – Additional Japanese non-apparel terminations – Impact from terminated mensw
Slide 8: Revenue grew double-digit in all regions
REVENUE GREW DOUBLE-DIGIT IN ALL REGIONS REST OF WORLD: 6% 35% GROWTH EUROPE: 35% AMERICAS: 25% 18% GROWTH 27% GROWTH ASIA PACIFIC: 34% 52% GROWTH H1 2011 RETAIL/WHOLESALE REVENUE % growth on underlying basis 15 REVENUE GREW DOUBLE-DIGIT IN ALL REGIONS • ASIA PACIFIC UP 52% – Up 39% excluding China
Slide 9: Revenue grew double-digit in all product divisions
Revenue grew DOUBLE-DIGIT in all product divisions CHILDRENS: 4% 24% GROWTH MENSWEAR: 24% 37% GROWTH NON-APPAREL: 39% 28% GROWTH WOMENSWEAR: 33% 35% GROWTH H1 2011 RETAIL/WHOLESALE REVENUE % growth on underlying basis 17 Revenue grew DOUBLE-DIGIT in all product divisions • CORE OUTERWEAR AND REPLENI
Slide 10: Financial highlights
STACEY CARTWRIGHT — EVP, CHIEF FINANCIAL OFFICER 19 FINANCIAL HIGHLIGHTS SIX MONTHS TO 30 SEPTEMBER 2011 2010 £M £M CHANGE REVENUE 829.6 641.1 29% ADJUSTED PBT 161.6 128.5 26% ADJUSTED DILUTED EPS 26.9p 21.1p 27% DIVIDEND PER SHARE 7.0p 5.0p 40% NET CASH 174.2 180.9 (4%) 20 10
Slide 11: Operating profit up 25%; retail/wholesale profit up 32%
OPERATING PROFIT UP 25% £31.3m £0.7m £162.1m £129.7m £0.4m H1 2010 EXCHANGE RETAIL/ LICENSING H1 2011 RATES WHOLESALE OPERATING PROFIT 21 RETAIL/WHOLESALE PROFIT UP 32% SIX MONTHS TO 30 SEPTEMBER 2011 2010 £M £M CHANGE RETAIL/WHOLESALE REVENUE 775.3 592.3 31% GROSS MARGIN 517.6 380.8 AS % OF REVENUE
Slide 12: Retail/wholesale gross margin up 240bp
RETAIL/WHOLESALE GROSS MARGIN UP 240BP 66.7% 64.3% 60.2% 56.8% 56.5% 57.6% H1 2007 H1 2008 H1 2009 H1 2010 H1 2011 RETAIL AS % OF GROUP SALES 45% 45% 54% 56% 57% 64% GROSS MARGIN INC SPAIN EXC SPAIN 23 RETAIL/WHOLESALE GROSS MARGIN UP 240BP • GROSS MARGIN AT 66.7% – Up 240 basis points • DRIVEN BY –
Slide 13: Retail/wholesale operating expenses/revenue at 51.8%
RETAIL/WHOLESALE OPERATING EXPENSES/REVENUE AT 51.8% 51.8% 49.5% 47.4% 46.9% 45.0% 43.9% H1 2007 H1 2008 H1 2009 H1 2010 H1 2011 RETAIL AS % OF GROUP SALES 45% 45% 54% 56% 57% 64% OPERATING EXPENSES/REVENUE INC SPAIN EXC SPAIN 25 RETAIL/WHOLESALE OPERATING EXPENSES/REVENUE AT 51.8% • INCREASE REFLEC
Slide 14: Licensing profit and income statement
LICENSING PROFIT SIX MONTHS TO 30 SEPTEMBER 2011 2010 £M £M REVENUE 54.3 48.8 GROSS MARGIN AT 100% 54.3 48.8 OPERATING EXPENSES (7.9) (6.5) OPERATING PROFIT 46.4 42.3 OPERATING MARGIN 85.5% 86.7% YEN RATE 135 145 H1 2011 INCLUDES FX BENEFIT OF £3.4M IN REVENUE AND NIL IN OPEX 27 INCOME STATEMENT SIX
Slide 15: Cash inflow from operations and free cash flow
CASH INFLOW FROM OPERATIONS SIX MONTHS TO 30 SEPTEMBER 2011 2010 £M £M OPERATING PROFIT 162.1 129.7 SPAIN OPERATING PROFIT/(LOSS) 0.6 (2.7) RESTRUCTURING SPEND (6.2) (9.5) DEPRECIATION AND AMORTISATION 39.5 28.6 EMPLOYEE SHARE SCHEME COSTS 16.0 10.0 INCREASE IN INVENTORIES (90.3) (69.8) INCREASE IN
Slide 16: Total cash flow and outlook
TOTAL CASH FLOW SIX MONTHS TO 30 SEPTEMBER 2011 2010 £M £M FREE CASH FLOW (17.9) (31.6) DIVIDENDS (68.4) (45.7) ESOP TRUST PURCHASES (42.2) (6.4) CAPITAL CONTRIBUTIONS 4.9 4.2 OTHER CASH ITEMS 0.4 0.1 EXCHANGE DIFFERENCE (0.5) (1.7) TOTAL CASH FLOW (123.7) (81.1) NET CASH AT 31 MARCH 297.9 262.0 NET
Slide 17: Leveraging the franchise
Angela ahrendts — Chief executive officer 33 LEVERAGING THE FRANCHISE — INTENSIFYING NON-APPAREL DEVELOPMENT — ACCELERATING RETAIL-LED GROWTH — INVESTING IN UNDER-PENETRATED MARKETS — PURSUING OPERATIONAL EXCELLENCE 34 17
Slide 18: Innovation: sustaining competitive advantage
Innovation SUSTAINING competitive advantage • DIGITAL CHANGING THE WORLD • HARDWIRING CREATIVE THINKING INTO OUR ORGANISATION • INNOVATION IN – Product design – Marketing – Retail – Technology 35 Innovation in technology • WORKING WITH KEY PARTNERS • LAUNCH MAJOR INITIATIVES BASED ON TRENCH COAT – A
Slide 19: Innovation around Burberry Body
INNOVATION around BURBERRY BODY • MORE THAN JUST A FRAGRANCE LAUNCH – Global audience – Coherent brand story across multiple channels • MULTI-MILLION POUND INNOVATIVE MARKETING CAMPAIGN – Created in-house – Funded by our licensee 37 social media SAMPLES OFFERED THROUGH FACEBOOK TV CAMPAIGN PREVIEWED
Slide 20: Synchronisation in all channels
synchronisation IN all channels • HOLOGRAM AT RUNWAY SHOW • IN RETAIL STORES • IN DEPARTMENT STORE WINDOWS • ON BURBERRY.COM • ON BURBERRY ACOUSTIC • PR EVENTS • HIGH PROFILE OUTDOOR ADVERTISING • SUCCESSFUL NUDE MONTHLY CAPSULE 39 40 20
Slide 21: Momentum and consistency in H1
MOMENTUM AND CONSISTENCY IN H1 — EXECUTE KEY STRATEGIES — INVEST FOR GROWTH — Creative culture AND INNOVATION SUSTAINING COMPETITIVE ADVANTAGE — GREAT BRAND, GREAT COMPANY 41 42 21
Slide 22: Appendix: Disclaimer
APPENDIX 43 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 forwar
Slide 23: Adjusted measures and IR contacts
ADJUSTED MEASURES H1 2010 has been re-presented to exclude the results of the discontinued business in Spain. Discontinued operations in H1 2011 delivered an operating profit of £0.6m (H1 2010: operating loss £10.3m, including a £7.6m restructuring charge) Adjusted measures exclude the put option li