Burberry Group Plc expect wholesale revenue to fall by around -25%

Burberry Group PLC (LON:BRBY) has announced its preliminary results for the 52 weeks ended 30 March 2024.

“Executing our plan against a backdrop of slowing luxury demand has been challenging. While our FY24 financial results underperformed our original expectations, we have made good progress refocusing our brand image, evolving our product and strengthening distribution while delivering operational improvements. We are using what we have learned over the past year to finetune our approach, while adapting to the external environment. We remain confident in our strategy to realise Burberry’s potential as the Modern British Luxury brand and in our ability to successfully navigate this period.”

– Jonathan Akeroyd, Chief Executive Officer

*See page 13 for definitions of alternative performance measures

Comparable store sales by region*

*See page 5 for further detail including split of Asia Pacific

Financial performance in FY24

·      Revenue flat at CER and -4% at reported

·      Comparable store sales -1% with robust H1 up +10% offset by a challenging H2 -8%

·      Adjusted operating profit fell -25% CER and reported -34% with margins 15.5% and 14.1% respectively

·      Free cash flow £63m with £208m capex mainly on new or refurbished stores

·      £400m share buyback completed in the year

·      Full year dividend of 61.0p proposed

Strategic progress in FY24

·      Refocused storytelling around Modern British Luxury; improved brand perception; and double-digit growth in elite customer numbers and spend

·      Elevated aesthetic and quality of seasonal offer; begun to reinvigorate larger, core collections

·      Strengthened distribution network; more than 50% of stores now new or refurbished

·      Reconfigured supply chain to new creative vision; improved product availability on core replenishment lines and strengthened manufacturing capabilities; continued delivery against sustainability roadmap

Priorities for FY25

·      Refine brand expression and increase product focus in storytelling; and strengthen how and where we engage new and existing clients to deepen connection with them

·      Build out full product offer, ensuring balance between seasonal and core collections

·      Enhance retail store experience and focus on conversion; elevate customer experience online; and rationalise wholesale channel in EMEIA to further increase control of distribution

·      Improve operational delivery; drive cost efficiencies; and advance sustainability agenda

OUTLOOK

In the context of a still uncertain external environment, we expect H1 to remain challenging. We expect to see the benefit of the actions we are taking from H2. Wholesale revenue is estimated to fall by around -25% in the first half as we increase control of distribution. We will continue to balance investment in consumer facing areas with disciplined cost control to support our growth ambition. We have identified cost savings to enable us to offset the impact of inflation in the second half. Based on foreign exchange rates effective as of 25 April 2024, we now expect a currency headwind of c.£30m to revenue and c.£20m to adjusted operating profit in FY25.

All metrics and commentary in the Financial Review exclude adjusting items unless stated otherwise. The following alternative performance measures are presented in this announcement: CER, adjusted profit measures, comparable sales, free cash flow, cash conversion, adjusted EBITDA and net debt. The definitions of these alternative performance measures are in the Appendix on page 13.

Certain financial data within this announcement have been rounded. Growth rates and ratios are calculated on unrounded numbers.

The financial information for the 52 weeks ended 30 March 2024 and 1 April 2023 contained in this document does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The financial information for the 52 weeks ended 30 March 2024 and 1 April 2023 has been extracted from the consolidated financial statements of Burberry Group plc for the 52 weeks ending 30 March 2024 which have been approved by the directors on 14 May 2024 and will be delivered to the Registrar of Companies in due course. The auditor’s report on those financial statements was unqualified and did not contain a statement under section 498 of the Companies Act 2006.

·        There will be a virtual presentation for investors and analysts today at 9.30am (UK time) that can be viewed live on the Burberry Group plc website www.burberryplc.com, you can also click here to register.

·        The supporting slides and an indexed replay will be available on the website later in the day

·        Burberry Group will issue its First Quarter Trading Update on 19 July 2024

·        The AGM will be held on 16 July 2024