Burberry Group Plc · LSE:BRBY

Burberry — FY2005/06 Earnings Presentation

48 slides from Burberry's earnings presentation, 2006

  1. Slide 1: Burberry Established 1856

  2. Slide 2: John Peace, Chairman

    John Peace Chairman

  3. Slide 3: 2005/06 Highlights

    2005/06 Highlights ƒ Positioning for next phase of growth ƒ Leadership transition ƒ Major infrastructure investment ƒ Key retail initiatives ƒ Completed evolution to fully public company

  4. Slide 4: Rose Marie Bravo, Chief Executive

    Rose Marie Bravo Chief Executive

  5. Slide 5: Revenue

    Revenue Year Financial Highlights (millions) £742.9 £715.5 £675.8 £593.6 £499.2 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 Retail Wholesale Licensing

  6. Slide 6: EBIT

    EBIT Year Financial Highlights (millions) £161.3 £165.6 Pre-Atlas £142.6 £154.5 £116.7 £90.3 2001/2002(1) 2002/2003(1) 2003/2004(1) 2004/2005(2) 2005/2006(3) Margin 18.1% 19.7% 21.1% 22.5% 22.3% (1) Under UK GAAP, excluding goodwill amortisation and exceptional items (2) Under IFRS (3) Pre-Atlas cos

  7. Slide 7: Diluted EPS

    Diluted EPS Year Financial Highlights 24.1p 22.2p Pre-Atlas 19.1p 22.3p 14.6p 12.1p 2001/2002(1) 2002/2003(1) 2003/2004(1) 2004/2005(2) 2005/2006(2) (1) Under UK GAAP, excluding goodwill amortisation and exceptional items (2) Under IFRS

  8. Slide 8: Products, Channels, Regions, Atlas

    Products Channels Regions Atlas

  9. Slide 9: Revenue by Product Category

    Revenue by Product Category 2005/06 Other* 2% Licensing Underlying Growth 11% 1H 2H Y Womenswear 34% Womenswear 1% 6% 3% Accessories 25% Menswear 4% 3% 4% Accessories 2% (2)% 0% Menswear 28% * Includes childrenswear

  10. Slide 10: Prorsum Runway

    Prorsum Runway ƒ Strong editorial response ƒ Attracting new client ƒ Strong sell-throughs ƒ New marketing thrust ƒ Voted top 10 women’s collection (WWD Fall 06) SS06 Campaign

  11. Slide 11: Outerwear

    Outerwear ƒ Merchandising cornerstone ƒ Reinvigorating the classics ƒ Strong Spring season for coats, trenches, quilts Spring/Summer 06

  12. Slide 12: Womenswear

    Womenswear ƒ Second half strength ƒ Reflects product adjustments ƒ Improved product flow Spring/Summer 06

  13. Slide 13: Menswear

    Menswear ƒ Consistent performance ƒ Ongoing product efforts ƒ Customisation Spring/Summer 06

  14. Slide 14: Accessories

    Accessories ƒ New merchandise direction ƒ Continued investment ƒ Handbag reorientation Spring/Summer 06

  15. Slide 15: Fragrance

    Fragrance _ BURBERRY i LONDON

  16. Slide 16: Licensing

    Licensing ƒ Strength in product licenses ƒ Eyewear in transition ƒ Watches on track Kate Moss

  17. Slide 17: Channels

    Channels 2005/06 Licensing 11% Underlying Growth 1H 2H Y Retail 9% 13% 11% Wholesale 46% Retail Wholesale (1)% (7)% (4)% 43% Licensing 3% 8% 6%

  18. Slide 18: 2005/06 Retail Activity

    2005/06 Activity Retail New stores/ Refurbishments/ Concessions Expansions ƒ 20% total revenue growth US San Antonio, TX Philadelphia, PA – 25% second half San Diego, CA Boston, MA Naples, FL Denver, CO ƒ 8% underlying space Palm Beach Garden, FL Washington, DC growth Outlets (3) Westchester, NY – e

  19. Slide 19: 2006/07 Retail Plans

    2006/07 Plans Retail ƒ 14 new stores and New stores/ Major Refurbishments/ concessions Concessions Expansions US Atlantic City, NJ ƒ Minimum 10% underlying Kansas City, MO space expansion Northbrook, IL Riverside, NJ Outlets (2) EU Madrid Regent Street, London Concessions (3) Asia Sydney Ocean Centr

  20. Slide 20: Spain Concessions

    Spain Concessions Retail ECI Diagonal, Barcelona

  21. Slide 21: International Wholesale

    International Wholesale SAK S FILET El HARVEY NICHOLS SELFRIDGES :\"° cee Lafesehe ASETAN BARNEYS oe /PRINTEMPS| cies RAH blapmingdale's DAVID JONES

  22. Slide 22: Emerging Markets

    Emerging Markets Wholesale ƒ Outstanding gains in 2005/06 ƒ Opened 9 stores ƒ Five stores planned for 2006/07 Warsaw, Poland

  23. Slide 23: Japan Licensing

    Japan Licensing ƒ Brand enhancement ongoing ƒ Initiatives showing positive results Black Label Osaka Takashimaya

  24. Slide 24: Japan Imports

    Japan Imports ƒ AW06 import initiatives – key categories – leathergoods test ƒ Prorsum concessions ƒ Work in progress Tokyo Subway Station

  25. Slide 25: Stacey Cartwright, Chief Financial Officer

    Stacey Cartwright Chief Financial Officer

  26. Slide 26: Financial Highlights

    Financial Highlights(1) Year to 31 March 2004/05 2005/06 % Growth £m £m Reported Underlying (2) Turnover 715.5 742.9 4% 3% Operating Profit before 161.3 165.6 3% 5% Atlas Atlas cost - 11.1 - - Diluted EPS before Atlas 22.2p 24.1p 9% - Dividend per share 6.5p 8.0p 23% - Dividend payout ratio 29% 33%

  27. Slide 27: Turnover

    Turnover 6 Months to 31 March ƒ Growth £8.2 (£2.3) £384.3m – 5% reported £10.9 £367.5m – 3% underlying 2004/05 Underlying Exchange Conversions 2005/06 growth rates

  28. Slide 28: Retail Revenue

    Retail Revenue 6 Months to 31 March £11.5 £192.2m ƒ Growth £6.6 £19.6 – 24% reported £154.5m – 13% underlying ƒ 9% space increase 2004/05 Underlying Exchange Conversions 2005/06 growth rates

  29. Slide 29: Wholesale Revenue

    Wholesale Revenue 6 Months to 31 March ƒ Decline £173.9m (£11.8) – 13% reported £2.3 (£13.8) £150.6m – 7% underlying ƒ Key markets – Spain – US 2004/05 Underlying Exchange Conversions 2005/06 growth rates

  30. Slide 30: Licensing Revenue

    Licensing Revenue 6 Months to 31 March ƒ Growth £3.1 (£0.7) £41.5m £39.1m – 6% reported – 8% underlying ƒ Japan up high single digits – royalty rate increase ƒ Global licenses – generally solid gains 2004/05 Underlying Exchange 2005/06 growth rates

  31. Slide 31: Gross Profit Margin

    Gross Profit Margin 6 Months to 31 March ƒ 220bps gross margin 62.1% 59.9% expansion ƒ Stronger collections – AW05: lower mark downs – SS06: good early response ƒ Channel mix Second half Second half 2004/05 2005/06

  32. Slide 32: Operating Expenses before Atlas Costs

    Operating Expenses before Atlas Costs 6 Months to 31 March ƒ Expanded retail network – conversions 39.7% 37.1% ƒ Investing in infrastructure ƒ 150th anniversary marketing ƒ Exit GUS pension scheme Second half Second half 2004/05 2005/06

  33. Slide 33: EBIT before Atlas Costs

    EBIT before Atlas Costs 6 Months to 31 March ƒ Underlying growth £3.8 £1.0 (£2.4) £86.1m £83.7m – H1 6% – H2 5% – FY 5% 2004/05 Underlying Exchange Conversions 2005/06 growth rates

  34. Slide 34: EBIT Margin

    EBIT Margin Year to 31 March 2005/06 2004/05 First Half Year Pre Atlas costs Retail and wholesale 14.8% 14.3% 14.5% Licence 85.5% 85.4% 85.6% Total 22.5% 22.2% 22.3% Post Atlas costs Total 22.5% 21.4% 20.8%

  35. Slide 35: Cash Flow from Operations

    Cash Flow from Operations £ millions 2004/05 2005/06 EBIT (1) 161.3 165.6 Atlas costs – (11.1) Depreciation and similar charges 24.4 24.9 Increase in stocks (12.9) (17.8) (Increase)/Decrease in debtors (7.3) 2.2 Increase/(Decrease) in creditors 1.5 (21.2) Other 8.4 5.8 Cash flow from operations 175.

  36. Slide 36: Cash Flow

    Cash Flow Year to 31 March £ millions 2004/05 2005/06 Cash flow from operations 175.4 148.4 Net interest 4.7 1.6 Capex (37.2) (30.7) Property sales proceeds 3.1 3.6 Net acquisition related - (23.6) Tax paid (49.5) (43.6) Cash inflow before financing 96.5 55.7

  37. Slide 37: Capital Management

    Capital Management ƒ Cash neutral balance sheet ƒ Completed £250 million repurchase programme – £192 million repurchased in 2005/06 – £12.5 million net cash position at March 2006 ƒ Ongoing plans – share repurchases consistent with capitalisation strategy

  38. Slide 38: Atlas: 2005/06 Activity

    2005/06 Activity Atlas ƒ £50m programme over 3 years ƒ P/L benefits in excess of £20m pa by 2007/08 ƒ Strong foundation ƒ Moving from design to implementation ƒ Firmly embedded in business Atlas ƒ Expensed £11 million in 05/06

  39. Slide 39: Atlas: 2006/07 Plans

    2006/07 Plans Atlas 2006 2007 Treasury Global Sales & Stock Analytics UK/Europe & Phase I Phase II Phase III Corporate US, Korea, HK & Taiwan Post Implementation Support & other regions

  40. Slide 40: 2006/07 Outlook

    2006/07 Outlook ƒ Retail – minimum 10% space expansion – 14 new stores and concessions ƒ Wholesale: H1 up low single digit underlying ƒ Licensing: broadly flat underlying relative to 2005/06, with yen negative impact ƒ Capital expenditures approximately £50 million ƒ Atlas P/L benefits approximately

  41. Slide 41: Angela Ahrendts, Chief Executive Designate

    Angela Ahrendts Chief Executive Designate

  42. Slide 42: Operational Excellence

    Operational Excellence Back end of the business Front end of the business

  43. Slide 43: Product: Multi-category Cross-Generational Appeal

    Product: Multi-category Cross-Generational Appeal

  44. Slide 44: Retail Led Growth

    Retail Led Growth

  45. Slide 45: Invest in High Potential Growth Markets

    Invest in High Potential Growth Markets

  46. Slide 46: Leveraging the Franchise

    Leveraging the Franchise New York, 57th Street

  47. Slide 47: Slide 47

  48. Slide 48: Disclaimer

    Disclaimer 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 differ materially from any expected future results in forward looking st

Burberry Group — FY2005/06 Earnings Presentation on 6ix