Burberry Group plc · LSE:BRBY
Burberry — H1 2014 Earnings Presentation
28 slides from Burberry's earnings presentation, Nov 14, 2013
Slide 1: Interim results for the six months ended 30 September 2013
Interim results FOR THE six months ENDED 30 September 2013 SIR JOHN PEACE — CHAIRMAN 1
Slide 2: Christopher Bailey and Angela Ahrendts
CHRISTOPHER BAILEY — CHIEF CREATIVE OFFICER Angela ahrendts — CHIEF executive OFFICER 2
Slide 3: First half achievements
FIRST HALF ACHIEVEMENTS • FIRST HALF PERFORMANCE – Revenue grew 17% to £1,031m – Adjusted PBT unchanged at £174m – £208m cash – Interim dividend up 10% to 8.8p • CONSISTENT EXECUTION OF KEY STRATEGIES – Unlocking power of regional teams • Digital • Beauty STRONG BRAND MOMENTUM BURBERRY KISSES BY GOO
Slide 4: Revenue grew 17%
REVENUE GREW 17% WHOLESALE LICENSING £51m £1m (£11m) £1,031m £98m (£17m) £883m £26m H1 2012 EXCHANGE RETAIL CORE BEAUTY CORE 2012 H1 2013 RATES WHOLESALE LICENSING FRAGRANCE ROYALTY REVENUE REVENUE GREW 17% • REVENUE GREW 14% UNDERLYING • RETAIL – 67% of revenue – 17% underlying growth • WHOLESALE –
Slide 5: Retail revenue grew 17%
RETAIL REVENUE GREW 17%* £75m £694m £23m £19m £577m H1 2012 EXCHANGE NEW COMP H1 2013 RATES SPACE STORE GROWTH REVENUE * UNDERLYING RETAIL REVENUE GREW 17% • COMPARABLE STORE SALES GREW 13% – Uneven trading – Q1 and Q2 both averaged 13% • INCREASED AVERAGE SELLING PRICES HELPED GROWTH – Prorsum and
Slide 6: Embracing digital
EMBRACING DIGITAL • IPADS IN STORE • CUSTOMER 1-2-1 • COLLECT IN STORE • DRIVE REVENUE THROUGH – Increased conversion – Personalisation – Improved customer loyalty 6
Slide 7: Wholesale revenue grew 13%
WHOLESALE REVENUE GREW 13%* £51m (£17m) £295m £253m £7m H1 2012 EXCHANGE BEAUTY CORE WHOLESALE H1 2013 RATES REVENUE * UNDERLYING WHOLESALE REVENUE GREW 13% • EXCLUDING BEAUTY, WHOLESALE REVENUE DOWN 7% UNDERLYING – Marginally ahead of guidance • H2 OUTLOOK – Expect mid to high single-digit % underl
Slide 8: Beauty
BEAUTY • SIGNIFICANT OPPORTUNITY – Large market; under-penetrated compared to peers – Most widely encountered projection of brand – Halo effect across all product divisions • COMPLEX TRANSITION PERIOD – Supply chain – Regulatory/compliance – Distributor relationships and high inventory levels • INVE
Slide 9: Licensing revenue down 19%
LICENSING REVENUE DOWN 19%* £52.6m (£0.4m) (£10.6m) £0.8m £42.4m H1 2012 EXCHANGE 2012 CORE LICENSING H1 2013 RATES FRAGRANCE ROYALTY REVENUE * UNDERLYING LICENSING REVENUE DOWN 19% • EXCLUDING 2012 FRAGRANCE ROYALTY – Revenue up 2% underlying (up 1% at reported FX) – Japan unchanged year-on-year •
Slide 10: Preparing for Japan transition
PREPARING FOR JAPAN TRANSITION ROPPONGI HILLS, TOKYO BURBERRY TWITTER JAPAN BURBERRY.COM JAPAN EDITORIAL COVERAGE 10
Slide 11: Balanced by region
BALANCED BY REGION AMERICAS: 25% 20% GROWTH ASIA PACIFIC: 36% 15% GROWTH EMEIA*: 39% 14% GROWTH H1 2013 RETAIL/WHOLESALE REVENUE % growth on underlying basis including first time contribution from Beauty * EUROPE AND REST OF WORLD INTEGRATED TO FORM EMEIA FROM 1 APRIL 2013 ASIA PACIFIC ART OF THE TR
Slide 12: Europe, Middle East, India and Africa; Americas
EUROPE, MIDDLE EAST, INDIA AND AFRICA PRINTEMPS, PARIS REGENT STREET, LONDON KNIGHTSBRIDGE, LONDON AMERICAS BLOOMINGDALES, NEW YORK CURITIBA, BRAZIL NORDSTROM.COM MEXICO CITY, MEXICO 12
Slide 13: Balanced by product division
BALANCED BY PRODUCT DIVISION BEAUTY: 5% CHILDRENS: 4% 11% GROWTH ACCESSORIES: 37% MENS: 24% 9% GROWTH 11% GROWTH WOMENS: 30% 10% GROWTH H1 2013 RETAIL/WHOLESALE REVENUE % growth on underlying basis BALANCED BY PRODUCT DIVISION 13
Slide 14: Carol Fairweather, Chief Financial Officer
FESTIVE – BURBERRY WITH LOVE CAROL FAIRWEATHER — CHIEF FINANCIAL OFFICER 14
Slide 15: Financial highlights
FINANCIAL HIGHLIGHTS SIX MONTHS TO 30 SEPTEMBER 2013 2012 £M £M CHANGE REVENUE 1,031 883 17% ADJUSTED PBT 173.9 173.4 nc ADJUSTED DILUTED EPS 28.4p 29.0p (2%) NET CASH 208 237 (12%) DIVIDEND PER SHARE 8.8p 8.0p 10% FINANCIAL HIGHLIGHTS • DELIVERED UNCHANGED ADJUSTED PBT OF £174M • BETTER THAN GUIDAN
Slide 16: Retail/wholesale profit grew 7%
RETAIL/WHOLESALE PROFIT GREW 7% £6.1m (£8.3m) £6.8m £137.6m £4.1m £128.9m H1 2012 EXCHANGE BEAUTY INCREASED PRP CORE BUSINESS H1 2013 RATES CHARGE RETAIL/WHOLESALE OPERATING PROFIT RETAIL/WHOLESALE PROFIT GREW 7% SIX MONTHS TO 30 SEPTEMBER 2013 2012 £M £M CHANGE RETAIL/WHOLESALE REVENUE 989.1 829.9
Slide 17: Retail/wholesale gross margin unchanged
RETAIL/WHOLESALE GROSS MARGIN UNCHANGED 69.2% 69.2% 66.7% 64.3% 57.6% H1 2009 H1 2010 H1 2011 H1 2012 H1 2013 RETAIL AS % OF 56% 57% 64% 65% 67% TOTAL REVENUE GROSS MARGIN RETAIL/WHOLESALE GROSS MARGIN UNCHANGED • GROSS MARGIN UNCHANGED AT 69.2% – Beauty dilutive • MODEST IMPROVEMENT EXCLUDING BEAUT
Slide 18: Retail/wholesale operating expenses/revenue at 55.3%
RETAIL/WHOLESALE OPERATING EXPENSES/REVENUE AT 55.3% 53.7% 55.3% 51.8% 49.5% 46.9% H1 2009 H1 2010 H1 2011 H1 2012 H1 2013 RETAIL AS % OF 56% 57% 64% 65% 67% TOTAL REVENUE ADJUSTED OPERATING EXPENSES/REVENUE RETAIL/WHOLESALE OPERATING EXPENSES/REVENUE AT 55.3% • OPERATING EXPENSES/REVENUE INCREASES
Slide 19: Licensing profit
LICENSING PROFIT £44.7m (£0.4m) (£10.6m) £0.8m £1.5m £36.0m H1 2012 EXCHANGE 2012 CORE GROWTH LOWER H1 2013 RATES FRAGRANCE COSTS ROYALTY LICENSING PROFIT LICENSING PROFIT SIX MONTHS TO 30 SEPTEMBER 2013 2012 £M £M REVENUE 42.4 52.6 GROSS MARGIN AT 100% 42.4 52.6 OPERATING EXPENSES (6.4) (7.9) OPERA
Slide 20: Income statement
INCOME STATEMENT SIX MONTHS TO 30 SEPTEMBER 2013 2012 £M £M ADJUSTED OPERATING PROFIT 173.6 173.6 NET FINANCE INCOME/(CHARGE) 0.3 (0.2) ADJUSTED PROFIT BEFORE TAX 173.9 173.4 EXCEPTIONAL ITEMS (14.9) (61.5) PROFIT BEFORE TAX 159.0 111.9 TAX (42.5) (26.5) DISCONTINUED OPERATIONS 0.0 0.1 NON-CONTROLLI
Slide 21: Cash inflow from operations
CASH INFLOW FROM OPERATIONS SIX MONTHS TO 30 SEPTEMBER 2013 2012 £M £M ADJUSTED OPERATING PROFIT 173.6 173.6 DEPRECIATION AND AMORTISATION 61.5 48.6 EMPLOYEE SHARE SCHEME COSTS 17.0 10.2 INCREASE IN INVENTORIES (79.1) (42.3) INCREASE IN RECEIVABLES/OTHER (54.9) (48.1) INCREASE/(DECREASE) IN PAYABLES
Slide 22: Movement in net cash
MOVEMENT IN NET CASH £142m (£63m) (£65m) £297m (£92m) (£11m) £208m MAR 2013 OPERATING CAPITAL TAX DIVIDENDS OTHER SEP 2013 CASHFLOW EXPENDITURE MOVEMENT IN NET CASH SIX MONTHS TO 30 SEPTEMBER 2013 2012 £M £M CASH INFLOW FROM OPERATIONS 142.2 138.3 CAPITAL EXPENDITURE (63.0) (88.8) CAPITAL CONTRIBUTI
Slide 23: FY 2014 outlook
FY 2014 OUTLOOK • BEAUTY – £140m wholesale revenue; around £10m profit – Complex transition period – Additional marketing spend to support launches – Confident in significant opportunity in Beauty • IMPACT OF FX ON TRANSLATION – Benefit to revenue and profit in H1 – Would be negative in H2 if curren
Slide 24: Continued momentum in the business
Continued momentum in the business — Strong financial position — Goal remains TO drive profitable growth 24
Slide 25: Solid first half
Angela Ahrendts — Chief executive officer SOLID FIRST HALF — FOCUS ON FESTIVE — EXCITING LONG-TERM GROWTH OPPORTUNITIES BY CHANNEL, REGION AND PRODUCT 25
Slide 26: Disclaimer
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 forward-looking st
Slide 27: Adjusted measures
ADJUSTED MEASURES All metrics and commentary in this presentation exclude the results of the discontinued business in Spain and exceptional items unless stated otherwise. Exceptional items are: A charge of £7.5m in reported operating expenses being the amortisation of the beauty licence intangible
Slide 28: IR contacts
IR CONTACTS Fay Dodds Horseferry House VP, Investor Relations Horseferry Road fay.dodds@burberry.com London SW1P 2AW Charlotte Cowley Tel: +44 (0)20 3367 3524 Director of Investor Relations charlotte.cowley@burberry.com www.burberryplc.com Adam Wright www.burberry.com Director of Strategic Operation