41
1
PRELIMINARY RESULTSFOR THE YEAR ENDED 31 MARCH 2009
3
INTRODUCTIONRAPID ACTIONS IN CHALLENGING MARKETS
• ROBUST PERFORMANCE IN CHALLENGING MARKETS– Sales up 7% underlying (21% reported)– Adjusted PBT of £175m
• STRONG FINANCIAL PROGRESS– Inventory down 19% underlying– £8m cash at year end– Renewed banking facilities– Maintained dividend– Well advanced in £50m global cost
efficiency programme
• REFINING AND IMPLEMENTING FIVE KEY STRATEGIES
• FOCUS ON BRAND
RUNWAY PICTURE
4
AGENDA
FINANCIAL REVIEW
STRATEGIC AND OPERATING REVIEW
QUESTIONS
PICTURE
5
REVENUE UP 7%*
• RETAIL– 52% of sales– 14% underlying growth
• WHOLESALE– 41% of sales– 2% underlying growth
• LICENSING– 7% of sales– 9% underlying decline
* UNDERLYING
£995m
£1,202m£138m
£69m £7m (£7m)
FY 2008 EXCHANGERATES
RETAIL WHOLESALE LICENSING FY 2009
REVENUE
6
RETAIL REVENUE UP 14%*
£484m
(£2m)£54m £630m
£76m £11m
£7m
FY 2008 EXCHANGERATES
BME NEWSPACE
H1 H2 FY 2009
• GROWTH IN ALL REGIONS EXCLUDING SPAIN
• COMPARABLE STORE SALES UP 1.1% (H1 UP 3.4%; H2 DOWN 0.5%)– Strong growth in Europe and Asia– US flagship markets more resilient– Lower proportion of full price sales
• OPENED NET– 16 mainline stores
• Excludes 6 transferred with BME– 22 concessions– 7 outlets– 14% more space
• OUTLOOK FY 2009/10– 10-12% space growth
REVENUE
COMPARABLE STORE GROWTH
* UNDERLYING
7
WHOLESALE REVENUE UP 2%*
£489m(£20m)£31m
£426m
(£4m)£56m
FY 2008 EXCHANGERATES
BME H1 H2 FY 2009
• GROWTH IN ALL REGIONS EXCLUDING SPAIN– Revenue up 11%* excluding Spain
• BETTER FLOW OF DELIVERIES
• OUTLOOK H1 2009/10– Down 15% at constant currency
excluding• Cost efficiency programme actions• Rationalisation of European
specialty accounts• BME conversion
– Down 25% at constant currency including these actions
REVENUE
UNDERLYING GROWTH
* UNDERLYING
8
LICENSING REVENUE DOWN 9%*
£84.8m £82.6m£5.1m (£5.1m)(£2.2m)
FY 2008 EXCHANGERATES
NON -RENEWALS
UNDERLYINGGROWTH
FY 2009
• SLOWDOWN IN JAPAN– Weak department store sales
• MENSWEAR– Further non-renewals
• GLOBAL LICENCES– Entry to brand– More resilient
• OUTLOOK FY 2009/10– Reported revenue up due to c.£17m
favourable Yen impact– Underlying decline 10-15%
• Continued weakness in Japan• Remaining menswear non-renewals
– Global product licence growth• New iconic eyewear launch• London watch strategy • New fragrance launches
REVENUE
* UNDERLYING
9
BY REGION
• GROWTH IN ALL REGIONS EXCLUDING SPAIN– Europe: +17%– Asia Pacific: +17%– Americas: +9%
• SPAIN IS 13% OF SALES– Revenue down 24%– Difficult economic environment– More rapid contraction of multi-brand
accounts– All goodwill written off– Cost efficiency programme with
headcount reduction of about one-third– Closer global collaboration
FY 2008/09 RETAIL/WHOLESALE REVENUE% growth on an underlying basis
EUROPE +17%
SPAIN(24%)
AMERICAS+9%
ASIA PACIFIC+17%
REST OF WORLD+40%
10
BY PRODUCT CATEGORY
• GROWTH IN ALL PRODUCT CATEGORIES– Womens: +6%– Mens: +5%– Non-apparel: +12%– Childrens: +55%
FY 2008/09 RETAIL/WHOLESALE REVENUE% growth on an underlying basis
WOMENSWEAR +6%
MENSWEAR+5%
NON-APPAREL+12%
CHILDRENS+55%
STACEY CARTWRIGHTEVP, CHIEF FINANCIAL OFFICER
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FINANCIAL HIGHLIGHTS
12 MONTHS TO 31 MARCH2009
£M2008
£M CHANGE
REVENUE 1,202 995 21%
ADJUSTED PBT* 174.6 200.2 (13%)
REPORTED PBT (16.1) 195.7 -
ADJUSTED DILUTED EPS* 30.2p 31.6p (4%)
DIVIDEND PER SHARE 12.0p 12.0p nc
* SEE APPENDIX FOR DEFINITION OF ADJUSTED
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ADJUSTED OPERATING PROFIT £181M*
£206.2m
£180.8m
£10.6m (£31.0m)
(£5.0m)
FY 2008 EXCHANGERATES
RETAIL/WHOLESALE
LICENSING FY 2009
• CURRENCY IMPACT– £11m positive 2008/09
• £5m negative 2007/08• £8m negative 2006/07
ADJUSTED OPERATING PROFIT
* SEE APPENDIX FOR DEFINITION OF ADJUSTED
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LICENSING PROFIT
12 MONTHS TO 31 MARCH2009
£M2008
£M
CHANGE ATCONSTANTCURRENCY
£M
REVENUE 82.6 84.8 (7.3)
GROSS MARGIN AT 100% 82.6 84.8 (7.3)
OPERATING EXPENSES (11.9) (14.2) 2.3
OPERATING PROFIT 70.7 70.6 (5.0)
OPERATING MARGIN 85.6% 83.3%
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RETAIL/WHOLESALE PROFIT
12 MONTHS TO 31 MARCH2009
£M2008
£M CHANGE
REVENUE 1,118.9 910.6 + 23%
GROSS MARGIN 583.2 532.9
AS % OF REVENUE 52.1% 58.5% (640bp)
HORSEFERRY/SAP COSTS (10.0) -
OTHER OPERATING EXPENSES (463.1) (397.3)
AS % OF REVENUE (41.4%) (43.6%) 220bp
ADJUSTED OPERATING PROFIT 110.1 135.6
AS % OF REVENUE 9.8% 14.9% (510bp)
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RETAIL/WHOLESALE – GROSS MARGIN DOWN 640BP
55.2% 56.9% 58.5%52.1%
2006 2007 2008 2009
YEAR TO MARCH
• H1 DOWN 340BP; H2 DOWN 880BP
• POSITIVE FACTORS– Sourcing benefits– Favourable product mix (non-apparel)
• FULL PRICE SALES BEHIND PLAN
• OUTLOOK FY 2009/10– Increase in gross margin, H2 weighted
• Conservative procurement• Improved merchandising
disciplines• Higher proportion of full price sales• Wholesale to retail shift• Cost efficiency programme
benefits of c.£15m
RETAIL/WHOLESALE GROSS MARGIN
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40.6% 42.3% 43.6%41.4%*
2006 2007 2008 2009
YEAR TO MARCH
OPERATING EXPENSES/REVENUE
• 2008/09 IMPACTED BY– Continued investment– Tight management of discretionary
expenses– Lower bonus/share scheme costs
• OUTLOOK FY 2009/10– Increase in opex/sales ratio
• Cost efficiency programme delivers c.£35m
• Operating deleverage• Wholesale to retail shift• Renewed bonus/share scheme
accruals
RETAIL/WHOLESALE – OPERATING EXPENSES/SALES 220BP BETTER
* EXCLUDES HORSEFERRY/SAP COSTS
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COST EFFICIENCY PROGRAMME
• ABOUT £50M GLOBAL COST EFFICIENCY PROGRAMME EXPECTED TO UNDERPIN PROFITABILITY IN 2009/10 AND BEYOND
• ACCELERATING BENEFITS FROM INVESTMENTS MADE IN SUPPLY CHAIN, IT AND INFRASTRUCTURE– Supply chain– Corporate processes
• COST REDUCTION INITIATIVES– Restructured Spanish operations: supply chain; Thomas Burberry; corporate– Rationalised UK and US manufacturing capacity– Closed one European showroom– Reduced corporate headcount– Continued tight management of discretionary expenses– Total headcount reduction of nearly 15%
• FINANCIAL IMPACT– £50m benefits split 70% opex: 30% gross margin – £55m P&L restructuring charge in 2008/09; balance in 2009/10– £16m cash outflow in 2008/09; about £35m planned in 2009/10
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INCOME STATEMENT
12 MONTHS TO 31 MARCH2009
£M2008
£M
ADJUSTED OPERATING PROFIT 180.8 206.2
NET FINANCE CHARGE (6.2) (6.0)
OTHER ITEMS (190.7) (4.5)
TAXATION
ADJUSTED PBT 174.6 200.2
11.0 (60.5)
MINORITY INTERESTS (0.9) -
ATTRIBUTABLE (LOSS)/PROFIT (6.0) 135.2
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OTHER ITEMS
12 MONTHS TO 31 MARCH2009
£M2008
£M
RESTRUCTURING COSTS (54.9) -
GOODWILL IMPAIRMENT (116.2) -
STORE IMPAIRMENTS/ONEROUS LEASES (13.4) -
NEGATIVE GOODWILL 1.7 -
RELOCATION OF HEADQUARTERS (7.9) 15.1
ATLAS COSTS - (19.6)
TOTAL (190.7) (4.5)
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TAXATION
12 MONTHS TO 31 MARCH 2009PBT
£M
TAX (CHARGE)/
CREDIT£M
TAX RATE%
ADJUSTED 174.6 (41.6) 23.8%
OTHER ITEMS* (190.7) 20.0
ONE-OFF TAX CREDITS - 32.6
REPORTED (16.1) 11.0
*SOME ITEMS NOT TAX DEDUCTIBLE
ONE-OFF TAX CREDITS WILL REDUCE CASH TAX PAYABLE IN FY 2009/10 BY C.£23M
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CASH FLOW FROM OPERATIONS
12 MONTHS TO 31 MARCH2009
£M2008
£M
ADJUSTED OPERATING PROFIT 180.8 206.2
OTHER ITEMS (15.8) (19.6)
DEPRECIATION AND AMORTISATION 45.1 32.7
EMPLOYEE SHARE SCHEME COSTS 4.5 14.3
DECREASE/(INCREASE) IN INVENTORIES 48.8 (122.6)
DECREASE/(INCREASE) IN RECEIVABLES 2.1 (29.1)
(DECREASE)/INCREASE IN PAYABLES (36.0) 28.8
CASH INFLOW FROM OPERATIONS 229.5 110.7
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FREE CASH FLOW
12 MONTHS TO 31 MARCH2009
£M2008
£M
CASH INFLOW FROM OPERATIONS 229.5 110.7
CAPITAL EXPENDITURE (89.9) (48.5)
ACQUISITION-RELATED PAYMENTS (0.3) (10.0)
NET INTEREST (5.9) (7.0)
TAX PAID (26.3) (53.3)
PROCEEDS FROM FIXED ASSET SALES 0.1 28.3
OTHER NON-CASH ITEMS 12.5 (5.0)
FREE CASH FLOW 119.7 15.2
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TOTAL CASH FLOW
12 MONTHS TO 31 MARCH2009
£M2008
£M
FREE CASH FLOW 119.7 15.2
DIVIDENDS (51.7) (47.4)
SHARE BUY BACK - (39.6)
OTHER CASH 0.5 3.4
EXCHANGE DIFFERENCE 3.3 7.0
TOTAL CASH FLOW 71.8 (61.4)
NET CASH/(DEBT) AT 31 MARCH 7.6 (64.2)
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OUTLOOK
RETAIL 10-12% average space increase in FY 2009/10(including stores operated by BME)
WHOLESALE H1 2009/10 at constant currency– Down around 15% excluding Burberry actions – Down around 25% in total
LICENSING Down 10-15% at constant currency in FY 2009/10– More than offset by exchange rate benefits
including c.£17m favourable Yen impact
CAPITAL EXPENDITURE c.£60m (excluding Japan)
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ANGELA AHRENDTSCHIEF EXECUTIVE OFFICER
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LEVERAGING THE FRANCHISE
INTENSIFYING NON-APPAREL DEVELOPMENT
ACCELERATING RETAIL-LED GROWTH
INVESTING IN UNDER-PENETRATED MARKETS
PURSUING OPERATIONAL EXCELLENCE
CONTINUED PROGRESS ON STRATEGIC INITIATIVES
SS09 CAMPAIGN
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LEVERAGING THE FRANCHISEONE COMPANY, ONE BRAND
• OUTERWEAR– Reinforcing heritage and leadership– Accelerated innovation– Now c.60% of womens; c.40% of mens– Reduces fashion risk in apparel
• FURTHER RESHAPING PRODUCT PYRAMID– Prorsum
• Brand DNA– Collection
• New iconic branding• Initiating Collection/Lifestyle split to
gain share– Supercharging Lifestyle
• Sport• Denim• Burberry Brit label
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LEVERAGING THE FRANCHISECONSISTENCY ACROSS CUSTOMER TOUCH POINTS
HORSEFERRY HOUSE 444 MADISON AVENUE
KNIGHTSBRIDGE PITTSBURGH
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LEVERAGING THE FRANCHISEMARKETING HELD AS % OF SALES
BEAT FOR MEN
DANIEL CRAIG
SS09 E-BROCHURE
HUGH JACKMAN
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INTENSIFYING NON-APPARELINNOVATION IN CORE ICONS
• 12% UNDERLYING GROWTH– 33% of revenue (2006: 29%)
• HANDBAGS/LEATHER GOODS OVER 60% OF RETAIL SALES
• FURTHER PRODUCT INNOVATION– Continued development of pyramid in shoes,
soft leather goods– Build mens accessories, luggage
• JAPANESE NON-APPAREL JV PROGRESSING– Building team– Finalising business plan– Met with major customers
• ENHANCED ICONIC CORE CHECK PLATFORM– Added new innovative variations (mega, tonal)– Centralised design ensures programme optimised in
all product divisions
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RETAIL-LED GROWTHSHIFT TO MORE DYNAMIC RETAIL MODEL
• RETAIL REVENUE UP 14% UNDERLYING– Now 52% of sales (2006: 43%)
• CONTINUE TO INVEST IN PROFITABLE NEW SPACE– Plan to open net 10-15 mainline stores in 2009/10 – Cluster strategy in high demographic flagship markets– Continue to test childrenswear standalone stores
• EMERGENCE OF E-COMMERCE– Post SAP, reallocation of IT resources
• DRIVE PRODUCTIVITY THROUGH GLOBAL INTEGRATED PLANNING– 25% reduction in AW09 options stocked in mainline
stores– Greater overlap between regional buys– Enables focused marketing and visual merchandising
• DRIVE PRODUCTIVITY THROUGH BURBERRY EXPERIENCE
IMAGES
New store
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RETAIL-LED GROWTHBURBERRY EXPERIENCE
• PILOTED TRAINING PROGRAMME TO IMPROVE SALES AND CUSTOMER SERVICE– Sales productivity below peers
• H2 2008/09 PILOT– Product and service focus– Sales staff responsive– Pilot stores outperformance
• GLOBAL ROLLOUT IN 2009/10– H1: Europe, Americas, Asia– H2: Emerging Markets, Spain
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UNDER-PENETRATED MARKETS GAINING SHARE
• US WHOLESALE ONLY 7% OF GROUP REVENUE– Inventory to be more in line with sales from AW09 – Continue to gain share– Pursue initiatives to drive productivity of existing space
and gain space in selected doors
• EMERGING MARKETS 9% OF REVENUE (2008: 6%)– Good performances from China and Saudi Arabia– Increasing volatility– Further strengthened organisation
• PARTNERS OPENED EIGHT STORES IN 2008/09– About 15 stores planned for 2009/10– Including 5+ in China
• GOOD PROGRESS IN BURBERRY MIDDLE EAST JV– Strengthened team– Opened four stores, including two childrenswear
standalones in H2– Wholesale strategy
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PURSUING OPERATIONAL EXCELLENCEREDUCING COMPLEXITY
• SAP ROLL-OUT OVER 80% COMPLETE – US retail went live April 2009– Major markets now on SAP– 80% of mainline stores now on SAP
• BENEFITS OF SAP IN EUROPE RETAIL – Improved planning– Margin by SKU– Profitability by channel, product and location– Long tail of benefits
• PROGRESS ON SUPPLY CHAIN AND LOGISTICS– Supplier reduction and rationalisation continues– Hub strategy
• Asia hub live• UK hub transition underway
– Global carrier programme delivering benefits
SUPPLY CHAIN IMAGE
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SUMMARY
• GREAT BRAND/GREAT COMPANY– Corporate responsibility: align with Burberry values– Sustainability: energy efficient headquarters– Burberry Foundation: empowers young people
• STRONG BRAND MOMENTUM
• FIVE KEY STRATEGIES EFFECTIVE
• CHALLENGING ECONOMIC ENVIRONMENT INTO 2009/10
• DYNAMIC MANAGEMENT TEAM
IMAGE
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APPENDIX
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ADJUSTED PROFIT
* “Adjusted” refers to profitability measures (pre and post tax) calculated excluding:1. Restructuring costs of £54.9m (2008: nil) relating to the Group’s cost efficiency
programme.2. Impairment charges of £129.6m (2008: nil) relating to Spanish goodwill (£116.2m) and
stores (£13.4m).3. Profit of £1.7m (2008: nil) representing negative goodwill on the formation of the
Burberry Middle East joint venture.4. Impact of one-off tax credits of £32.6m (2008: nil).5. Net charge of £7.9m (2008: net profit of £15.1m) relating to the relocation of global
headquarters. 6. Atlas costs of nil (2008: £19.6m) relating to the Group’s infrastructure redesign
initiative.
Underlying change is calculated at constant exchange rates
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IR CONTACTS
Kim Warren
Investor Relations Associate
Fay Dodds
Director of Investor Relations
Charlotte Cowley
Investor Relations Manager
Horseferry House
Horseferry Road
London
SW1P 2AW
Tel: +44 (0)20 3367 3524
