Burberry Group Plc · LSE:BRBY
Burberry — FY2020 Earnings Presentation
32 slides from Burberry's earnings presentation, 2020
Slide 1: Burberry Preliminary Results 2020
BURBERRY LONDON ENGLAND PRELIMINARY RESULTS 2020 MARCO GOBBETTI CHIEF EXECUTIVE OFFICER
Slide 2: Agenda and Key Messages
AGENDA INTRODUCTION COVID-19 IMPACT AND RESPONSE FINANCIAL RESULTS STRATEGY AND OUTLOOK Q&A KEY MESSAGES Excellent strategic progress, ahead of expectations Material impact from COVID-19, but mitigating actions implemented rapidly and brand heat remains strong Strong balance sheet and protecting liq
Slide 3: Where We Are in Our Journey
WHERE WE ARE IN OUR JOURNEY 58 | ACCELERATE AND STRENGTHEN |) GROW SET THE FOUNDATION * Complete brand itioni + Continue to strengthen omplete Brand repositioning the brand + Accelerate growth + Complete product transformation + Ignite brand heat with influencers & key opinion leaders + Adapt the bu
Slide 4: Strong Brand Momentum
STRONG BRAND MOMENTUM Double digit growth INSTAGRAM - ENGAGEMENT RATE. WECHAT- ENGAGEMENT RATE AW20 SHOW - PRESS MENTIONS % % # FY19 FY20 FY19 FY20 AW19 AW20 Note: Graph not to scale STRONG COLLECTION PERFORMANCE FOR THE FIRST 9 MONTHS Double digit growth SUMMER 19 TOTAL SALES AUTUMN 19 / WINTER 19
Slide 5: Strong Quarterly Comp Sales
STRONG QUARTERLY COMP SALES |] Excluding Hong Kong S.A.R and accounting for likely shift TOTAL COMP SALES — BY QUARTER of spend to China and Korea £ rr | It L i re | | 1% | i | 5% 4% ° 3% FY19 FY20 FY19 FY20 FY19 FY20 FY19 FY20" Dec 29- Jan 25 a Q2 a8 2020 1 Impact of Hong Kong S.A.R and spend shift
Slide 6: Store Closures by Region
STORE CLOSURES BY REGION DEMAND DISRUPTION x approx. % closed as % total CHINA MeEMeIA |) AMERICAS MJ REST OF ASIA 6% 40% 60% 238 3 71 3 24 24 AS OF 4 FEB AS OF 19 MAR AS OF 28 MAR SUPPLY DISRUPTION SHORT-LIVED SUPPLY CHAIN DISRUPTION IN CHINA FACTORY CLOSURES IN EUROPE REDUCED CAPACITY IN FULFILLME
Slide 7: Burberry Immediate Response
BURBERRY IMMEDIATE RESPONSE OUR RESPONSE PROTECT OUR PEOPLE TIGHTLY MANAGE CASH SECURE OUR DRIVE REVENUE & COMMUNITIES AND COSTS PRODUCT, INVENTORY & SUPPLY CHAIN SUPPORTING THE FIGHT AGAINST COVID-19 PROVIDING PROTECTIVE EQUIPMENT FUNDING VACCINE DEVELOPMENT SUPPORTING COMMUNITIES IN NEED
Slide 8: FY20 Performance
FY20 PERFORMANCE GROUP REVENUE -3% VS LAST YEAR PRO FORMA ADJUSTED OPERATING PROFIT -8% VS LAST YEAR PRO FORMA REPORTED OPERATING PROFIT -63% VS LAST YEAR AGENDA INTRODUCTION COVID-19 IMPACT AND RESPONSE FINANCIAL RESULTS STRATEGY AND OUTLOOK Q&A
Slide 9: FY 2020 Comp Sales Progression
JULIE BROWN CHIEF OPERATING & FINANCIAL OFFICER FY 2020 COMP SALES PROGRESSION FY 2020 RETAIL COMPARABLE STORE FY 2020 RETAIL COMPARABLE STORE SALES PROGRESSION YOY % SALES YOY % H +5% ' -3% 5% 4% 3% Qi Q2 Q3 4wks end Q4 25 Jan ' FY2019 YTD 25Jan FY 2020 ben ee ee ee ene nn en ene en ences! 2020
Slide 10: Comparable Retail Store Sales -3%
COMPARABLE RETAIL STORE SALES -3% EMEIA: STABLE COMP STORE SALES YOY % AMERICAS:-LSD COMP STORE SALES YOY % +LSD ' + +HSD ' HSD FLAT FLAT | H +LSD ' _ | Qi Q2 Q3 1 4wks end ' 25 Jan H Qi Q2 Q3 -DD ‘ MAINLAND CHINA: +LSD COMP STORE SALES YOY % ASIA PACIFIC*: -MSD COMP STORE SALES YOY % : ' +HSD ' ‘ +
Slide 11: Retail and Wholesale Revenue by Product
RETAIL AND WHOLESALE REVENUE BY PRODUCT : FY 2020 ' 9 months YOY } FY 2020 FY 2019 H CERGrowth } £m £m Reported CER ! ‘ ~ — — Growth Growth | +2% ' £2,586m £2,674m (3%) (4%) ! +2% Women's 4 a 837 (5%) (5%) | x ' ' oO 1 : s H . ! H Ss i 5 H 1 2 2% +2% H + ' +9% Men's 2 a5 698 fo of +9% H Children’s a
Slide 12: Pro Forma Adjusted Operating Profit Review
PRO FORMA ADJUSTED OPERATING PROFIT REVIEW FY 2020 PRO FORMA ADJUSTED OPERATING PROFIT BRIDGE | HKS.A.R and COVID | | losses £160m combined | Ye Adj operating Underlying | HKS.A.R COVID-19! Cost profit growth and ! losses losses | programme FY 2019 other Adj operating 16.1% margin -8% Cost savings P
Slide 13: Adjusting Items and Free Cash Flow
ADJUSTING ITEMS COVID related inventory provisions (recognised in COGS) (68) - COVID related store impairments (157) - Other COVID related items (16) - COVID-19 related adjusting items (241) = Restructuring costs (10) (12) Disposal of beauty business 5 7 BME deferred consideration income 2 4 Total a
Slide 14: Cash Balances and Capital Allocation
Cash balances FY 2019 Operating £1,246m lease debt Lease adj net debt/EBITDAR| _9-5x FCF pre capex MOVEMENT IN NET CASH (£149m) (£175m) {£3m) (£150m) 212m Capex Dividend Strategic Share buyback Other investments CAPITAL ALLOCATION FRAMEWORK APPLICATION + Reinvest for * Progressive * Strategic + Retu
Slide 15: In This Environment, Our Strategy Is Critical
IN THIS ENVIRONMENT, OUR STRATEGY IS CRITICAL... LUXURY In challenging environments, consumers favour strong brands and polarise even more between luxury and mass >) Diminished demand will increase competition and reinforce the importance of investing in the brand ACCESSIBLE LUXURY LUXURY HERITAGE F
Slide 16: Brand Values
BRAND VALUES AND AUTHENTICITY CONTENT AND STORYTELLING BRAND PARTNERSHIPS AND COLLABORATIONS COMMUNITY BUILDING ‘TUNE IN FOR A SESSION WITH AMAARAE — S FRIDAY 17 APRIL 72PM BST @amtaarae INFLUENCE AND 16
Slide 17: Localisation
LOCALISATION LOCALISATION BESPOKE PLANS FOR EACH MARKET, FOCUS ON LOCAL RAPIDLY REALLOCATE RESOURCES CONSUMERS BETWEEN ECONOMIES 17
Slide 18: China Focus and Korea Focus
CHINA FOCUS RHEQOA, Riccardo Tisch TRS WRDPHRARIT, MRIS, DNR T SAAB! BURBERRY x TENCENT LOCALISED AND EXCLUSIVE CAMPAIGNS NATIVE COLLABORATIONS SOCIAL RETAIL INSPIRATIONAL OUTREACH KOREA FOCUS BURBERRY ereen ae LOCALISED PRODUCT NATIVE COLLABORATIONS PARTNERSHIPS WITH LOCAL STORYTELLING THIRD PARTIE
Slide 19: Signs of Recovery in China and Korea
SIGNS OF RECOVERY IN CHINA AND KOREA SALES GROWTH ALREADY AHEAD OF LAST YEAR STRONG ONLINE PERFORMANCE CLEAR TRACTION IN HANDBAGS AND SMALL LEATHER GOODS | Dic &IDIGITAL, © 19
Slide 20: New Ways of Reaching Consumers
NEW WAYS OF REACHING CONSUMERS These are great! Also she did get LIVE STREAMING REMOTE SELLING IMMERSIVE EXPERIENCES ONLINE DEMAND T % YoY sales growth BURBERRY.COM GLOBAL DEMAND. FY20 FY21 Weeks 1-7 Weeks 1-7 (YTD) Note: Graph not to scale, demand defined as total value of transactions on .com 20
Slide 21: B Bounce
\\ ae] B BOUNCE 21
Slide 22: Product, Inventory and Supply Chain
PRODUCT, INVENTORY AND SUPRLY GHATN PRODUCT INJECT ENERGY AND NEWNESS WITH CAPSULES HERO OUTERWEAR FOCUS ON LEATHER 22
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Slide 24: Inventory and Supply Chain
INVENTORY AND SUPPLY CHAIN MANAGE OUR STOCK POSITION REALLOCATE STOCK TO MEET DEMAND SECURE SUPPLY CHAIN CAPACITY BALANCE SHEET AND LIQUIDITY 24
Slide 25: Planning for the Future
PLANNING FOR THE FUTURE CONSUMER FACING ACTIVITIES Optimising revenues INVENTORY Allowing headroom RANI Or BURBERRY eMAND > PLANNING ASSUMPTIONS SCENARIOS COST MITIGATION & BASELINE CAPEX Control & agility CASH CONSERVATION & FUNDING PLANS Tt Downside protection MITIGATING COST ACTIONS COST MITIGATI
Slide 26: Protecting Our Liquidity
PROTECTING OUR LIQUIDITY ACTIONS TO PROTECT LIQUIDITY PAUSING SHAREHOLDER DISTRIBUTIONS TIGHTLY MANAGING INVENTORY COST MITIGATION PRIORTISING CAPEX BOLSTERING CASH POSITION Tightly managing open to Variable, discretionary and Only committing to Drawn down RCF £300m Pausing the dividend buy and whol
Slide 27: Appendix
APPENDIX 27
Slide 28: 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 29: IFRS Adopted in FY 2020
IFRS 16 ADOPTED IN FY 2020 IFRS 16 changes Modified retrospective adoption approach Balance Sheet Recognition of right of use asset (“ROU”) Recognition of lease liabilities Income statement Replacement of minimum lease payments with lease interest expense and depreciation of right of use asset Cash
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 consideration of the underlying performance of the Group's ongoing business. These measures remove the impact of those items which shou
Slide 31: Foreign Exchange Rates and Store Portfolio
Euro US Dollar Chinese Yuan Renminbi Hong Kong Dollar Korean Won FOREIGN EXCHANGE RATES 115 1.26 1.14 113 1.27 1.31 8.88 8.82 9.89 10.26 1,504 1,460 At 30 March 2019 Additions Closures At 28 March 2020 Asia Pacific EMEIA Americas Total STORE PORTFOLIO Stores Concessions 233 146 19 15 (34) (12) 218 1
Slide 32: IR Contacts
IR CONTACTS Annabel Gleeson VP, Investor Relations annabel.gleeson@burberry.com Mitesh Kotecha Interim Investor Relations Director mitesh.kotecha@burberry.com Sophie Parker Investor Relations Coordinator sophie.parker@burberry.com 32