Burberry Group plc (LON:BRBY) has announced its interim results for 26 weeks ended 25 September 2021.

·       H1 FY22 revenues back at pre COVID-19 levels (CER) with adjusted operating profit ahead vs LLY*

– Within comparable store sales growth of 1% vs LLY*, full-price gained 18%

– Full-price performance driving gross margin and adjusted operating margin increases vs LLY*

·       Americas, Mainland China and South Korea delivered strong double-digit growth vs LLY* while other regions were under pressure from reduced tourist levels

·       Core product categories: leather saw double-digit growth in full-price comparable sales vs LLY with outerwear strengthening in the period

·       New store concept driving higher-spending customer recruitment. We now have 15 stores in the new format with around 50 new concept stores planned globally by end FY22

·       Digital performing well with full-price sales almost doubling vs LLY*

·       Set industry-leading commitments around climate including pledge to be Climate Positive by 2040 and support global conservation efforts

·       Strong cash generation with cash conversion over 100%. Interim dividend reinstated at 11.6p, 3% ahead of FY20 levels and recommenced the share buyback with £150m planned

Outlook

·       Maintaining our medium-term guidance for high single-digit top line growth and meaningful margin accretion* and confirm that we are comfortable with current year market expectations

*Guidance is quoted at constant exchange rates (CER) with the base year in FY20

The financial information contained herein is unaudited.

All metrics and commentary in the Interim Review exclude adjusting items unless stated otherwise.

GROUP H1 FY22 FINANCIAL HIGHLIGHTS

Revenue

·     Revenue £1,213m +45% CER, +38% reported

·     Retail comparable store sales +37% (Q1: +90%; Q2: +6%)

Adjusted profit

·     Adjusted operating profit £196m, 4.2x CER, 3.8x reported

·     Adjusted operating profit includes a £5m profit from the disposal of a property

·     Gross margin increased +130bps CER (+120bps reported). In line with our elevation strategy, gross margin benefited from a higher mix of full-price sales and product elevation driving higher average prices

·     Operating expenses impacted by higher investment and cost normalisation as guided

·     Adjusted diluted EPS 33.5p, up 7.3x

Reported profit measures

·    Reported operating profit £207m, up 2.4x at reported rates against H1 FY21 after adjusting items credit of £11m (H1 FY21: £37m credit) largely due to COVID-19 related rent concessions

·     Diluted EPS 35.7p, 2.9x reported

Cash measures:

·     Free cash inflow of £104m (H1 FY21: £45m outflow) with cash conversion over 100%

·     Cash net of overdrafts and borrowings of £846m at 25 September 2021 (27 March 2021: £919m). The £73m cash outflow reflects the higher than usual dividend payment in the half of £172m, being a full year dividend paid in respect of the prior year.

·     Interim dividend of 11.6p declared (H1 FY21: nil)

·     Share buyback of £150m to be completed in H2 2022

“We have made strong progress in the half. Full-price sales are growing at a double-digit percentage, driving margin expansion and strong free cash generation. We are seeing an acceleration in performance in countries less impacted by travel restrictions and we remain confident of achieving our medium-term goals. I would like to thank Marco Gobbetti for his vision and leadership of Burberry Group’s transformation. We are very excited that Jonathan Akeroyd is joining as our new CEO in April to build on the strong foundations to accelerate growth and deliver further value for our shareholders.” – Gerry Murphy, Chair