Interim results for 26 weeks ended 28 September 2024

 “My first few months have reaffirmed my belief that Burberry is an extraordinary luxury brand, quintessentially British, equal parts heritage and innovation. Burberry’s original purpose to design clothing that protects people from the weather is more relevant than ever. Our recent underperformance has stemmed from several factors, including inconsistent brand execution and a lack of focus on our core outerwear category and our core customer segments. Today, we are acting with urgency to course correct, stabilise the business and position Burberry for a return to sustainable, profitable growth. We have a powerful brand with broad appeal among luxury customers, authority in the outerwear and scarf categories which have remained resilient through this period, and a strong presence in all key luxury markets. Now, we have a clear framework to reignite brand desire, improve our performance and drive long-term value creation. Building on our strong foundations, I am confident that Burberry’s best days are ahead.” 

Joshua Schulman
Chief Executive Officer

STRATEGY UPDATE

Today, Burberry announces ‘Burberry Forward’, a strategic plan to reignite brand desire, improve our performance and drive long-term value creation. Our focus in this next phase is on reconnecting our brand with its original purpose and leveraging our strengths with a disciplined approach and a range of products to attract a broad base of luxury customers.

Burberry is a highly differentiated luxury brand with a unique history and heritage, and category authority in outerwear and scarves. Over the past several years, we moved too far from our core with disappointing results. Our brand expression was focused on being modern at the expense of celebrating our heritage. We introduced new brand codes and signifiers that were unfamiliar to our customers. Our product was weighted to seasonal fashion with a niche aesthetic obscuring our more timeless core collections. As we pursued brand elevation, our pricing particularly in leather goods did not always align with our category authority. Consequently, Burberry’s offer was skewed to a narrow base of luxury customers.

Burberry has all the attributes to be a high-performing luxury brand. We have the most opportunity where we have the most authenticity. We have an inspirational founder who created practical and stylish solutions for his era. An original purpose linked to a product that still resonates today. Authority in a core category. Quality that confers status and identity. Iconic brand codes. Relevance to a broad range of luxury customers and global brand awareness that is bigger than our business. 

Today’s luxury customer craves authenticity. As the only British luxury brand with such strong foundations, we have a competitive advantage. We will leverage our strengths and broad universal appeal to reclaim market share.

BURBERRY FORWARD:

OUR FRAMEWORK FOR SUSTAINABLE VALUE CREATION

Timeless British Luxury

• Juxtapose heritage and innovation across all customer touchpoints
• Balance seasonal fashion messages with campaigns celebrating outerwear authority
• Capture British wit and style and balance recognisable London imagery with British countryside

Lead with outerwear and earn authority in other categories

• Align pricing with category authority
• Celebrate iconic brand codes with recognisable brand signifiers
• Rebalance offer with fewer, bigger investments

Align distribution with product and customer strategy

• Increase store productivity through core category amplification
• Optimise brand presence in wholesale and outlet
• Improve e-commerce functionality and rebalance product assortment and styling

Reignite high-performance culture and capabilities

• Drive organisational clarity
• Rebuild executional discipline
• Leverage data-driven decision making to complement creativity and intuition

Delivery of the plan will be facilitated by greater alignment between commercial and creative teams and consistently putting the customer at the heart of everything Burberry does. We are reviving a high-performing culture. Our plan will be underpinned by continued focus on productivity, simplification and financial discipline.

We recognise there is much to be done in the short term, and we are acting with urgency. We are confident we can get back to generating £3 billion in annual revenue over time, while rebuilding margins and driving strong cash generation.
 

Immediate Actions

In the last 90 days, we have implemented the following immediate actions:

• Launched “It’s Always Burberry Weather” Outerwear campaign and “Wrapped in Burberry” Festive campaign to reset brand in the eyes of customers
• Evolved visual merchandising to accentuate outerwear and scarves in stores; initiated global roll out of Scarf Bars in 57th Street flagship in New York
• Updated styling online to appeal to a broad range of luxury customers; launched Virtual Scarf Try On
• Appointed new leaders across Marketing, Product Merchandising and Planning, and the Americas; introduced new ways of working to achieve creative and commercial alchemy
• Initiated cost savings programme to unlock annualised savings of c.£40m (c.£25m to deliver in FY25)
• Accelerated plan to address inventory overhang and restore scarcity
   

FY25 Outlook 

We are acting with urgency to stabilise the business and position the brand for a return to sustainable, profitable growth, supported by strong cash generation and balance sheet strength. We are confident that our strategic plan will improve our performance and drive long-term value creation. In the short term, with our all-important festive trading period ahead and an uncertain macroeconomic environment, it is too early to determine whether our second-half results will fully offset the first-half adjusted operating loss.

Revenue

• Revenue £1,086m -20% CER, -22% reported
• Retail comparable store sales -20% (Q1 -21%, Q2 -20%); Wholesale -29% CER, -30% reported

Adjusted (loss)/profit measures

• Adjusted operating loss of £41m including headwinds of £33m impairment charge (H1 FY24: £nil) and net £29m inventory provision charge (H1 FY24: net £6m charge)
• Adjusted gross margin 63.4%, -640bps at CER and reported
• Adjusted operating margin -3.4% CER, -3.8% reported
• Operating expenses before adjusting items -1% CER, -3% reported
• Adjusted diluted EPS -18.3p (H1 FY24: 42.1p).

Reported (loss)/profit measures

• Operating loss of £53m after £12m adjusting items charge (H1 FY24: £nil)
• Operating margin -4.9% reported
• Operating expenses after adjusting items flat versus last year at reported
• Diluted EPS -20.8p (H1 FY24: 42.1p).

Cash measures

• Free cash outflow of £184m (H1 FY24: £15m outflow)
• Cash net of overdrafts £324m at 28 September 2024 (30 March 2024: £362m), with borrowings of £602m and lease liabilities £1,136m.