Interim results for 26 weeks ended 1 October 2022

“Burberry has an extraordinary legacy, a unique British heritage and a very strong platform to build on, as shown in our half-year results. Our focus in this next phase is on growth and acceleration. We have a clear plan to achieve this across brand, product and distribution and a very talented designer in Daniel Lee, supported by a passionate team. I am confident in our ability to deliver our medium-term targets and realise our potential as the modern British luxury brand. I am excited about what we can achieve in pursuit of our long-term ambition to reach £5bn in revenue.”

Jonathan Akeroyd
Chief Executive Officer

Strategy for the next phase

The key elements of our plan to drive revenue growth and acceleration are:
 

Harness the power of our brand, informed by a new creative vision set by Daniel Lee

• Refocus on Britishness and strengthen our connection with British design, craft and culture 
• Amplify our brand through strong marketing and communication activations with high levels of impact 

Bring all product categories to full potential

• Broadly double sales of leather goods, shoes and women’s ready-to-wear and grow outerwear by around 50% in the medium term
  
• Ambition to grow accessories to more than 50% of Group sales in the long term
  

Grow customer lifetime value

• Accelerate customer acquisition, strengthen our relationship with customers and drive loyalty and retention

Strengthen distribution across all channels and regions

• Convert all stores to new concept by end-FY26 and boost sales densities by more than 50% to £25k per sq m 
  
• Double e-commerce revenue to reach around 15% of retail sales in the medium term
  
• Accelerate momentum in core markets
  

Seamless execution

• Continue to simplify and streamline key processes, deliver our bold sustainability commitments, ensure our people are supported and inspired to deliver, and positively impact our communities

Outlook

We maintain our near-term guidance to FY24 while mindful of the challenging macro environment and its potential impact on trading, particularly Covid-19 related disruption in Mainland China and recessionary risks in Europe and the Americas. We have established a new medium-term target to grow sales to £4bn at CER*, sustaining high-single digit growth with operating leverage ensuring good margin progression. 

* Base year FY22 exchange rates

Interim Results for 26 Weeks Ended 1 October 2022

Group Financial Highlights

Revenue

• Revenue £1,345m +5% CER, +11% reported
  
• Retail comparable store sales +5% (Q1: +1%; Q2: +11%); Wholesale +1% CER, +6% reported 
  

Adjusted profit

• Adjusted operating profit £238m, +6% CER, +21% reported
  
• Adjusted gross margin of 70.1%, flat at CER and +80bps at reported rates 
  
• Adjusted operating profit margin of 16.3% at CER, (+10bps), 17.7% reported rates (+150bps) 
  
• Operating expenses before adjusting items rose 4% at CER (+9% reported) 
• Adjusted diluted EPS 44.3p, +15% at CER, +32% reported 

Reported profit measures

• Operating profit £263m, +27% after adjusting items of £25m net credit (H1 FY22: £11m net credit) 
  
• Diluted EPS 48.9p, +37% reported
  

Cash measures

• Interim dividend per share declared of 16.5p (H1 FY22: 11.6p) 
  
• Free cash flow of £88m (H1 FY22: £104m)  
  
• Cash net of overdrafts and borrowings of £643m at 1 October 2022 (2 April 2022: £879m). Cash net of overdrafts amounted to £941m with borrowings of £298m and IFRS 16 liabilities of £1,139m. 
  

Business review

During the period, we continued to invest in our brand. We ran a highly successful campaign to support the expansion of our Lola handbag range, which drove above average comparable store sales growth in leather goods. We had a strong reception to our AW22 collection and we also debuted our SS23 collection, celebrating the British seaside. The show, which was Riccardo Tisci’s last for Burberry, was streamed across local and global platforms where it was watched 1.5m times. We have started the second half with the launch of our outerwear campaign. This was accompanied by a film, ‘Night Creatures’, that reflects a celebration of the joy and opportunity found in fearlessly embracing the unknown. 

New product launches and seasonal collections performed strongly. Leather goods sales saw good momentum with comparable sales increasing +15% in Q2; and +11% in H1. This was driven by handbags with the Lola now our best seller and helped by the introduction of the Frances shape for AW22. Outerwear comparable sales grew +3% in H1. Growth was impacted by lockdowns in Mainland China. The performance outside of Mainland China robust at +18% growth, with a strong performance across both Men’s and Women’s. 

In H1 we opened or renovated 22 stores including Bal Harbour in Miami and Taipei 101. We remain on track to open or refurbish 65 stores in the new concept this year, in addition to the 47 stores from FY22. 

In August, Burberry became the first luxury fashion brand and one of the first companies globally to receive approval from the Science Based Targets initiative (SBTi) for our net-zero emissions target. As we continue to explore alternative materials, we are proud to have become an Innovation Partner of Fashion For Good, a global initiative designed to inspire change across the industry. 

To support our colleagues with the rising cost of living this winter, we brought forward the new UK real Living Wage pay rates as defined by the Living Wage Foundation by more than six months. As we expand our support for young people around the world through The Burberry Foundation, we recently announced two new partners, International Youth Foundation and UK-based OnSide. 

For the full announcement please click here.