PRELIMINARY results FOR THE YEAR ENDED 31 MARCH...

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PRELIMINARY results FOR THE YEAR ENDED

31 MARCH 2011

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FINANCIAL REVIEW

—

Technology CREATING COMPETITIVE ADVANTAGE

—

STRATEGIC UPDATERetail-led growth

UNDER-PENETRATED MARKETS

—

QUESTIONS

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A record year for Burberry

• STRONG FINANCIAL POSITION– Revenue of £1.5bn

– Adjusted PBT of £298m

– Adjusted retail/wholesale EBIT margin of 15.6%

– Full year dividend of 20.0p

• FURTHER STRATEGIC PROGRESS– Extensive store opening programme

– Chinese operations acquired

– Spain restructuring completed

– Monthly flow of products introduced

– Burberry World launched

• CONTINUE TO INVEST IN FY 2012 TO DRIVE GROWTH

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5

REVENUE UP 27%

£1,501m

£1,185m

(£4m)£84m£140m

£66m£30m

FY 2010 EXCHANGE

RATES

CHINA RETAIL WHOLESALE LICENSING FY 2011

REVENUE

EXCLUDING DISCONTINUED SPANISH OPERATIONS

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REVENUE UP 27%

• REVENUE UP 24% UNDERLYING– 19% underlying growth excluding China

– Double-digit growth in retail and wholesale, all regions and all product categories

• RETAIL– 64% of sales

– 32% underlying growth including China

– 20% underlying growth excluding China

• WHOLESALE– 29% of sales

– 16% underlying growth including China

– 25% underlying growth excluding China

• LICENSING– 7% of sales

– 4% underlying decline

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RETAIL REVENUE UP 32%*

£710m

£962m£78m

£62m£90m

£22m

FY 2010 EXCHANGE

RATES

CHINA NEW

SPACE

COMP

STORE

GROWTH

FY 2011

REVENUE

* UNDERLYING


8

RETAIL REVENUE UP 32%*

• COMPARABLE STORE SALES UP 11%– Innovative digital marketing

– Monthly flow

– Replenishment

– Average selling price up; largely mix

– Mainline stores outperformed

• EXTENSIVE STORE OPENING PROGRAMME– Opened net 26 mainline stores

– Opened net 34 concessions (20 in Spain)

– Now one million square feet of retail selling space

• RENOVATIONS– Boston

– Las Vegas

• OUTLOOK FOR FY 2012– 12-13% increase in average selling space

– Plus 12% in H1 from acquired China stores

* UNDERLYING

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9

£441m

£377m

£84m

(£24m)£4m

FY 2010 EXCHANGE

RATES

CHINA UNDERLYING

GROWTH

FY 2011

REVENUE

WHOLESALE REVENUE UP 16%*

* UNDERLYING


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• UP 25% EXCLUDING CHINA

• STRONG CONSUMER DEMAND– Menswear

– Label segmentation

• FACILITATED BY SUPPLY CHAIN IMPROVEMENTS– Higher fulfilment rates

– In-season orders

• OUTLOOK FOR H1 2011/12– Up mid teens % underlying, excluding China

WHOLESALE REVENUE UP 16%*

* UNDERLYING

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REVENUE

£98m £98m£2m(£6m)£4m

FY 2010 EXCHANGE

RATES

NON -

RENEWALS

UNDERLYING

GROWTH

FY 2011

LICENSING REVENUE DOWN 4%*

* UNDERLYING

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• UP 1% AT REPORTED FX

• CLEANING UP LEGACY ISSUES COSTS £6M– Final regional menswear licences

– Japanese leather goods licence

• OTHER JAPANESE ROYALTY INCOME BROADLY FLAT

• DOUBLE-DIGIT GROWTH FROM GLOBAL PRODUCT LICENCES– Strengthened team

– Greater integration with brand

• OUTLOOK FOR FY 2012– Mid single-digit % underlying increase

– Assumes all Japanese apparel and non-apparel royalty income at contractual minimum levels

LICENSING REVENUE DOWN 4%*

* UNDERLYING

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REVENUE GREW DOUBLE-DIGITIN ALL REGIONS

EUROPE: 34%

15% GROWTHAMERICAS: 27%

16% GROWTH

ASIA PACIFIC: 33%

53% GROWTH

REST OF WORLD: 6%43% GROWTH

% growth on underlying basis

FY 2011 RETAIL/WHOLESALE REVENUE

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REVENUE GREW DOUBLE-DIGITIN ALL REGIONS

• ASIA PACIFIC LARGEST REGION IN H2– 35% of sales in H2

– China acquisition

– Strong performance in Hong Kong, with five stores opened

• EUROPE UP 15%– Double-digit comp growth

– Opened first European Brit trial store in Milan

– Retail about two-thirds of Europe revenue

• AMERICAS UP 16%– Opened four further Brit trial stores in US

– Opened fourth store in Canada, two stores in Brazil and one in Mexico

– Wholesale about one-third of Americas revenue

• REST OF WORLD UP 43%– Opened one store in the Middle East and three in India

– Net nine franchise stores opened

– Roughly half retail

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Revenue grew DOUBLE-DIGITin all products

WOMENSWEAR: 33%

21% GROWTH

MENSWEAR: 23%

29% GROWTH

NON-APPAREL: 40%

32% GROWTH

CHILDRENS: 4%

23% GROWTH

% growth on underlying basis

FY 2011 RETAIL/WHOLESALE REVENUE

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Revenue grew DOUBLE-DIGITin all products

• NON-APPAREL NOW 40% OF REVENUE– Underpinned by large leather goods

– Mens accessories under-penetrated

• MENSWEAR APPAREL GROWTH ACCELERATED TO 31%– Outerwear designs

– Replenishment

– Tailoring

• BURBERRY PRORSUM AND LONDON OUTPERFORMING– Extensive runway coverage of Prorsum

– Luxury quotient increased in London

• CHILDRENSWEAR EVOLVING– Team now based in London

– Replenishment and flow strategies initiated

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STACEY CARTWRIGHT

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EVP, CHIEF FINANCIAL OFFICER

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FINANCIAL HIGHLIGHTS

14%

43%

39%

39%

27%

GROWTH

262.0297.9NET CASH

14.0p20.0pDIVIDEND PER SHARE

35.1p48.9pADJUSTED DILUTED EPS

214.8297.9ADJUSTED PBT

1,1851,501REVENUE

2010£M

2011£M

12 MONTHS TO 31 MARCH

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ADJUSTED OPERATING PROFIT UP 37%

£219.9m

£301.1m

£6.3m

£80.1m (£5.2m)

FY 2010 EXCHANGE

RATES

RETAIL/

WHOLESALE

LICENSING FY 2011

ADJUSTED OPERATING PROFIT

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RETAIL/WHOLESALE PROFIT UP 59%

290bp

(100bp)

390bp

29%

CHANGE

12.7%15.6%AS % OF REVENUE

137.7219.5ADJUSTED OPERATING PROFIT

(48.3%)(49.3%)AS % OF REVENUE

(526.0)(691.8)OPERATING EXPENSES

61.0%64.9%AS % OF REVENUE

663.7911.3GROSS MARGIN

1,087.61,402.9RETAIL/WHOLESALE REVENUE

2010£M

2011£M12 MONTHS TO 31 MARCH

GOAL IS TO MANAGE GROSS MARGIN AND OPERATING EXPENSES DYNAMICALLY TO DELIVER FURTHER MODEST OPERATING MARGIN IMPROVEMENT IN FY 2012

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RETAIL/WHOLESALE GROSS MARGIN UP 390BP

56.9%58.5%

52.1%

59.7% 61.0%

64.9%

2007 2008 2009 2010 2011

INC SPAIN EXC SPAIN

YEAR TO MARCH

GROSS MARGIN

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RETAIL/WHOLESALE GROSS MARGIN UP 390BP

• H1 UP 670BP– Improved full price sell-through

• H2 UP 170BP– Wholesale to retail shift

– More replenishment

– Mainline outperformance

– Burberry Prorsum and London outperformed

– Raw material cost inflation

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RETAIL/WHOLESALEOPERATING EXPENSES/REVENUE AT 49.3%

ADJUSTED OPERATING EXPENSES/REVENUE

42.3%43.6%

42.3%

48.1% 48.3% 49.3%

2007 2008 2009 2010 2011

INC SPAIN EXC SPAIN

YEAR TO MARCH

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RETAIL/WHOLESALEOPERATING EXPENSES/REVENUE AT 49.3%

• REGIONAL COST LEVERAGE DESPITE– Wholesale to retail shift

– Investment in new ventures

• INVESTMENT IN CORPORATE INITIATIVES IN FY 2011– Creative media

– Burberry World

– Client services

• OUTLOOK FOR FY 2012– Further strengthen corporate functions

– Transitional flagship costs reduce profit by c.£10m

– Investment first half weighted

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252011 INCLUDES FX BENEFIT OF £4.4M IN REVENUE AND £0.2M IN OPEX

LICENSING PROFIT

84.3%82.9%OPERATING MARGIN

154144YEN RATE

82.281.6OPERATING PROFIT

(15.3)(16.8)OPERATING EXPENSES

97.598.4GROSS MARGIN AT 100%

97.598.4REVENUE

2010£M

2011£M


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INCOME STATEMENT

(70.4)(6.2)DISCONTINUED OPERATIONS

81.4208.4ATTRIBUTABLE PROFIT

(0.8)2.1NON-CONTROLLING INTEREST

(58.8)(83.2)TAX

211.4295.7PROFIT BEFORE TAX

(3.4)(2.2)EXCEPTIONAL ITEMS

214.8297.9ADJUSTED PROFIT BEFORE TAX

(5.1)(3.2)NET FINANCE CHARGE


2010£M

2011£M


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Discontinued Spanish operations

(45.4)(4.1)RESTRUCTURING COSTS

(25.0)-TAX

-(2.1)OPERATING RESULT

(70.4)(6.2)TOTAL

2010£M

2011£M


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CASH FLOW FROM OPERATIONS

-(2.1)SPAIN OPERATING LOSS

427.2367.8CASH INFLOW FROM OPERATIONS

33.964.3INCREASE IN PAYABLES

49.4(8.1)(INCREASE)/DECREASE IN RECEIVABLES

80.3(58.0)(INCREASE)/DECREASE IN INVENTORIES

18.128.3EMPLOYEE SHARE SCHEME COSTS

52.362.6DEPRECIATION AND AMORTISATION

(26.7)(20.3)RESTRUCTURING SPEND


2010£M

2011£M


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FREE CASH FLOW

7.47.0CAPITAL CONTRIBUTIONS FROM JV PARTNERS

304.8111.8FREE CASH FLOW

(1.6)(1.4)OTHER NON-CASH ITEMS

(51.3)(98.1)TAX PAID

(5.0)(3.2)NET INTEREST

(2.0)(51.9)ACQUISITIONS

(69.9)(108.4)CAPITAL EXPENDITURE

427.2367.8CASH INFLOW FROM OPERATIONS

2010£M

2011£M


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TOTAL CASH FLOW

254.435.9TOTAL CASH FLOW

262.0297.9NET CASH AT 31 MARCH

5.4(1.6)EXCHANGE DIFFERENCE

(3.3)(5.6)OTHER CASH ITEMS

(52.5)(68.7)DIVIDENDS

304.8111.8FREE CASH FLOW

2010£M

2011£M


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OUTLOOK

RETAIL FY 2012 average selling space up 12-13%

- Plus 12% in H1 from acquired China stores

WHOLESALE H1 underlying growth of mid teens % excluding China

- Up mid single-digit % including China

LICENSING FY 2012 underlying growth of mid single-digit %

- Assumes all Japanese royalty income at contractual minimums

- Small FX benefit

UNDERLYING TAX RATE c.27%

DIVIDEND POLICY Full year 40% payout based on adjusted diluted EPS

CAPITAL EXPENDITURE £180-200m

FY 2012 Modest operating margin improvement

Investment H1 weighted

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17

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JOHN DOUGLAS

—

CHIEF TECHNOLOGY OFFICER

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IT yesterday

10 REGIONAL IT DEPARTMENTS

11 EMAIL SYSTEMS

10 ERP SYSTEMS

10 TELEPHONE PROVIDERS

10 NETWORKS

MANY POS SOLUTIONS

LIMITED INTERNET ACCESS

GLOBAL IT

ONE GLOBAL EMAIL SYSTEM

ONE ERP SYSTEM (SAP)

ONE TELEPHONE PROVIDER

ONE GLOBAL NETWORK

COMMON POS SOLUTION

DESKTOP INTERNET ACCESS

IT today

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WORKING WITH KEY PARTNERS

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FY 2007/8

Finance/NSP

Manufacturing

Order book

Europe

FY 2008/9

Hong Kong

Australia

FY 2009/10

USA

Canada

Malaysia

Singapore

FY 2010/11

Korea

Brazil

Mexico

Taiwan

FY 2011/12

China

Middle East

SAP – ROLLOUT NEARLY COMPLETE

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BURBERRY.COM SUPPORTING CREATIVE

IT TODAY

RETAIL THEATRE

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Retail theatre connecting brand toucHpoints

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Retail theatre connecting brand toucHpoints

• HIGH DEFINITION EXTERNAL SCREENS– Showcasing multi-media content

• PLASMA TILE VIDEO WALLS IN-STORE – Livestreaming events

• TOUCH SCREEN TECHNOLOGY– Bringing product to life

• IPADS AND APPLICATIONS IN-STORE– Opening full collection to customers in store

• VIC FITTING ROOMS– Personalising shopping experience

• NETWORK AND INFRASTRUCTURE– Delivering the content

THE TECHNOLOGY

• CREATES POINT OF DIFFERENCE– Technology consistent globally– Content consistent globally

• TO IMPROVE RETAIL METRICS– To increase retail productivity– To increase units per transaction– To support VIC selling

• SOFT BENEFITS– One synchronised consumer message – Brand awareness– Brand loyalty

THE PAYBACK

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BURBERRY.comPUREST EXPRESSION OF THE BRAND

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• CONNECTING THE BURBERRY COMMUNITY– Art of the Trench

– Facebook

– Twitter

– YouTube

• COMPLETE PRODUCT OFFER– Innovative 3D displays

• BROAD GLOBAL REACH– 45 countries

– 23 currencies

– 6 languages

• PERSONALISED CUSTOMER SERVICE– Click to call

– Click to chat

– 24/7, 365 days a year

BURBERRY.comINNOVATION AND DIFFERENTIATION

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SUPPORTING CREATIVE

• TAILORED SYSTEMS– Design

– Creative media

• DIGITAL ADVANCES IN MARKETING– From stills to multi-media

• EXPANDED REACH OF FASHION SHOWS– From selected guests to one million viewers

globally

• MORE EVENTS– Beijing digital showcase

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LOOKING TO THE FUTURE

• COMMODITISATION OF IT

• CUSTOMER INSIGHT AND ANALYTICS

• CONNECTING WITH STAKEHOLDERS

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“MOST LUXURY COMPANIES SEE TECHNOLOGY AS A COST;

BURBERRY SEES IT AS A KEY DIFFERENTIATOR AND DRIVER”

—

VERIZON

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ANGELA AHRENDTS

—

CHIEF EXECUTIVE OFFICER

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LEVERAGING THE FRANCHISE

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INTENSIFYING NON-APPAREL DEVELOPMENT

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ACCELERATING RETAIL-LED GROWTH

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INVESTING IN UNDER-PENETRATED MARKETS

—

PURSUING OPERATIONAL EXCELLENCE

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Increased CAPITAL EXPENDITURE

CAPITAL EXPENDITURE

YEAR TO MARCH

£108m

£180-200m

FY 2011 FY 2012

IT/OTHER OTHER RETAIL FLAGSHIPS

£108m

£180-200m

YEAR TO MARCH

CAPITAL EXPENDITURE

FY 2011 FY 2012

IT/OTHER NEW STORES RENOVATIONS

FOCUS ON RETAIL FOCUS ON flagships

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INCREASED CAPITAL EXPENDITURE

• FY 2012 CAPITAL EXPENDITURE PLANNED AT £180-200M– Catch up from FY 2011

– New space growth accelerates to 12-13%

– Net 20-25 mainline stores

– Net 10 or so concessions

– 15-20 major refurbishments

– Focus in flagship markets

• IMPROVED PRODUCTIVITY ENABLES MORE PROJECTS TO MEET HURDLE RATE

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ACCELERATING RETAIL-LED GROWTH

HONG KONG

SHANGHAI

SYDNEY

PARISMILAN

AMSTERDAM

SAN FRANCISCOCHICAGO NEW YORK ROME

LONDON

RIOSÃO PAULO

REFURBISH/RELOCATE

NEW

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COVENT GARDEN BRIT

BOND STREET

Investing in London

KNIGHTSBRIDGE

LONDON HEATHROW TERMINAL 5

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DIRECTLY OPERATED

RETAIL/WHOLESALE REVENUE

2008 2011

16%

6%

2008 2011

NUMBER OF STORES % OF RETAIL/WHOLESALE REVENUE

£58m

£221m

2008 2011YEAR TO MARCH AS AT MARCH YEAR TO MARCH

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136

Emerging markets

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Emerging Markets includes China, India, Russia, Eastern Europe, Latin America and the Middle East

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Emerging markets

• ENTER NEW MARKETS VIA FRANCHISE– Armenia, Egypt, Israel and Mongolia in FY 2011

• TAKE DIRECT CONTROL AT APPROPRIATE STAGE– China in FY 2011

– Saudi Arabia, subject to government approval, in FY 2012

• INVEST IN EMERGING MARKETS– About 20 new stores in FY 2012

– Global initiatives in infrastructure, retail disciplines, marketing and social media

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China – smooth integration

• TEAM PROVEN IN EXECUTION

• GOOD PROGRESS IN BUILDING LOCAL ORGANISATION

• DRIVING RETAIL PRODUCTIVITY

• EVOLVING THE STORE NETWORK

• SERVING THE TRAVELLING CHINESE CUSTOMER

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CHINA – DEVELOPING SOCIAL MEDIA

TWITTER EQUIVALENT

FACEBOOK EQUIVALENT FACEBOOK EQUIVALENT

YOUTUBE EQUIVALENT

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GREAT BRAND/GREAT COMPANY

—

DELIVERED ON CORE STRATEGIES

—

BROAD PORTFOLIODRIVES 27% SALES GROWTH

—

39% PROFIT GROWTH

—

invest for growth IN FY 2012

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APPENDIX

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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 statements.

Burberry Group plc undertakes no obligation to update these forward-looking statements and will not publicly release any revisions it may make to these forward-looking statements that may result from events or circumstances arising after the date of this document.

All persons, wherever located, should consult any additional disclosures that Burberry Group plc may make in any regulatory announcements or documents which it publishes. All persons, wherever located, should take note of these disclosures.

This presentation does not constitute an invitation to underwrite, subscribe for or otherwise acquire or dispose of any Burberry Group plc shares, in the UK, or in the US, or under the US Securities Act 1933 or in any other jurisdiction.

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ADJUSTED MEASURES

“Adjusted” excludes:1. Restructuring credit of £1.0m in 2011 (2010: £3.4m charge) relating to the Group’s cost efficiency

programme announced in January 2009.2. Put option liability finance charge relating to the 15% economic interest in the Chinese business of

£3.2m (2010: nil).

Underlying change is calculated at constant exchange rates.Certain financial data within this presentation have been rounded.

FY 2010 has been re-presented to show the results of the discontinued Spanish operations separately.Discontinued operations in FY 2011 include an operating loss of £2.1m (2010: nil), restructuring costs of £4.1m (2010: £45.4m) and a nil tax charge (2010: £25.0m).

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GLOBAL

PRODUCTS

Licensing revenue

• JAPAN IS C. TWO-THIRDS OF LICENCE REVENUE– Brand sales around £1bn

– Premium positioning

• APPAREL LICENCE– Held by Sanyo Shokai and Mitsui

– Licence now ends 2015

– Roughly half is their “London” range and childrenswear

– Roughly half is more contemporary Black/Blue labels

• Two trial stores in Hong Kong

• NON-APPAREL LICENCES– Different licensees; short contracts

– Terminated leather goods and other licences

• NON-APPAREL JV REPORTS IN RETAIL /WHOLESALE– Testing imported global non-apparel collection

– Two shops in Ginza and Omotesando, Tokyo

– 14 concessions on luxury floors in department stores

– Less than 2% of group retail/ wholesale revenue

JAPAN

APPAREL

JAPAN

NON-APPAREL

FY 2011 LICENSING REVENUE

MENS/

OTHER

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IR CONTACTS

Kim Warren

Investor Relations Associate

[email protected]

Fay Dodds

Director of Investor Relations

[email protected]

Charlotte Cowley

Investor Relations Manager

[email protected]

Horseferry House

Horseferry Road

London

SW1P 2AW

Tel: +44 (0)20 3367 3524

www.burberryplc.com

www.burberry.com

www.artofthetrench.com

www.facebook.com/burberry

www.twitter.com/burberry

www.youtube.com/burberry

PRELIMINARY results FOR THE YEAR ENDED 31 MARCH...

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