REG - Burberry Group PLC - Burberry First Quarter Trading Update

BurberryAnnouncement

14/07/2023 07:00

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RNS Number : 9930F  Burberry Group PLC  14 July 2023

 

14 July 2023

BURBERRY GROUP PLC

FIRST QUARTER TRADING UPDATE

 

"We have made good progress in the quarter delivering high teens comparable
revenue growth led by the ongoing recovery in Mainland China. We saw continued
strength in our core outerwear and leather goods categories and are excited
about Daniel's product arriving in stores in September. While mindful of the
uncertain macroeconomic environment, we are confident of achieving our FY24
and medium-term guidance."
 Jonathan Akeroyd, Chief Executive Officer

 

·      Q1 comparable store sales increased 18%

o  Group ex Mainland China +11%; EMEIA +17%, South Asia Pacific +39%, Japan
+44%; South Korea +6% and Americas -8%

o  Strong recovery in Mainland China +46%

·      Core categories of outerwear and leather goods performed well

o  Outerwear comparable store sales up 36%, led by heritage rainwear

o  Leather goods comparable store sales up 13%

·      Compelling programme of brand and product activations driving
customer engagement, including launch of Summer capsule

·      Reopened flagship store on New Bond Street, London, offering an
immersive shopping experience across all categories; 19 stores
refurbished/opened in quarter

·      Announced expansion of Burberry Inspire community programme to
support 500,000 young people over next three years to unlock creativity and
drive positive change

·      Commenced a further share buy-back with the full £400m expected
to be completed by end of the calendar year

RETAIL REVENUE 13 WEEKS ENDED 1 JULY

                          1 July  2 July  % change
 £ million                2023    2022    Reported FX  CER*
 Retail revenue           589     505     +17%         +19%
 Comparable store sales*  +18%    +1%

*See page 4 for definition

OUTLOOK

We maintain our current year guidance of high single-digit revenue CAGR from
FY20 base equating to a low double-digit growth in FY24 and around 20%
adjusted operating margin at FY20 CER. Based on foreign exchange rates
effective as of 29 June 2023, we expect a currency headwind of c.£150m to
revenue and c.£70m to adjusted operating profit. We also maintain our
medium-term target of £4bn revenue*.

*Base year FY22 exchange rates

 

The financial information contained herein is unaudited

BUSINESS REVIEW

FY24 started well as comparable store sales advanced 18% in the first quarter.
The Group benefitted from strong underlying growth in EMEIA, South Asia
Pacific and Japan as well as the recovery in Mainland China from COVID-19
related lockdowns last year.

During the quarter, we continued to invest in brand and product, with our new
visual expression of Burberry driving the strong performance of outerwear, in
particular heritage rainwear. Comparable store sales of leather goods also
delivered double-digit growth, with women's bags, especially the Frances
shapes and vintage Burberry Check line performing well. We look forward to
building on this when Daniel Lee's debut runway collection launches in stores
in September.

We continued to inspire and engage our younger consumer base with social media
content iconising our brand codes. We achieved a record 20.8m views on TikTok,
with a post featuring our new blue rose print.

In May, we introduced our new swimwear campaign 'A Burberry Summer', inspired
by Burberry's heritage of adventure. The collection features a range of summer
ready-to-wear, including swimwear, as well as beach totes, all featuring the
iconic Burberry Check. This was supported by dedicated window displays in over
80 stores in key locations, as well as 15 seasonal pop ups in Turkey, Italy
and Thailand.

In the same month, we attended the Met Gala, where we were joined by British
and international talent including Jodie Comer and Stormzy wearing custom
Burberry looks. We collaborated with director and choreographer Wayne McGregor
to create the costumes for his latest work for The Royal Ballet, designed by
Daniel. The new ballet production debuted with its world premiere in June and
was performed at the Royal Opera House in London. Burberry also sponsored The
National Gallery's Summer Party for the second consecutive year.

During the quarter, we continued to elevate the customer experience,
refurbishing a further 19 stores in the period, including our New Bond Street
store in London, which reopened in June. An evolution of our store concept,
the flagship is home to an immersive shopping experience, offering womenswear,
menswear, eyewear, shoes, and accessories with a stronger focus on leather
goods, and a new VIP area. We also opened a store in 5(th) Avenue, New York
that temporarily replaces the 57(th) Street store whilst under refurbishment.
We remain on track to refurbish over 50% of the store network by end of FY24
and to complete the roll out across the rest of the portfolio by FY26.

At the same time, we maintained our support for our communities. In June, we
awarded the annual Thomas Burberry Prize to artist Christine Wilkinson,
building on our longstanding partnership with the Royal Academy of Arts. The
award reflects Burberry's continued commitment to supporting the next
generation of British creatives in contemporary arts and culture. To build on
this, we announced the launch of an RA Schools Scholarship Grant and Bursary.

We also announced the expansion of our flagship community programme, Burberry
Inspire. Designed in partnership between Burberry Group plc, The Burberry
Foundation and International Youth Foundation (IYF), the initiative will
support 500,000 young people over the next three years to unlock their
creativity and drive positive change. We also announced a two-year partnership
with The BRIT School to support fashion education and help young people from
global majority backgrounds to enter the creative industry.

 

REGIONAL COMPARABLE SALES PERFORMANCE

Q1 FY24 comparable store sales were up 18% in the period. All regions outside
of the Americas saw growth with Mainland China recovering from COVID-19
related lockdowns in the previous year. EMEIA, Japan and South Asia Pacific
showed good double-digit growth more than offsetting declines in the Americas.

·      Asia Pacific increased 36% with Mainland China up 46%. Globally,
we saw good strength from the Mainland Chinese customer that grew mid-teens
against FY22 and helped drive a strong performance in South Asia Pacific 39%
and contributed to the 44% increase in Japan. South Korea remained robust with
growth of 6% broadly in line with last year.

·      EMEIA grew 17% driven by tourists.

·      Americas decreased 8%, broadly in line with Q4 FY23. Globally,
the Americas customer decreased mid-single digit with the decline in locals
partially offset by outbound tourist spend.

Space contributed +1% in the quarter while FX was a headwind of 2%. In total,
reported retail sales grew 17% year on year at reported rates.

All metrics and commentary in this presentation are at reported FX and exclude
adjusting items unless stated otherwise.

Constant exchange rates (CER) removes the effect of changes in exchange rates.
The constant exchange rate incorporates both the impact of the movement in
exchange rates on the translation of overseas subsidiaries' results and on
foreign currency procurement and sales through the Group's UK supply chain.

Comparable sales are the year-on-year change in sales from stores trading over
equivalent time periods and measured at constant foreign exchange rates. It
also includes online sales. This measure is used to strip out the impact of
permanent store openings and closings, or those closures relating to
refurbishments, allowing a comparison of equivalent store performance against
the prior period. The measurement of comparable sales has not excluded stores
temporarily closed as a result of the COVID-19 outbreak.

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

 

ENQUIRIES

 Investors and analysts                                    020 3367 3524
 Julian Easthope  VP, Investor Relations                   julian.easthope@burberry.com (mailto:julian.easthope@burberry.com)
 Media                                                     020 3367 3764
 Andrew Roberts   SVP, Corporate Relations and Engagement  andrew.roberts@burberry.com

·        There will be a conference call for investors and analysts to
discuss this update today at 9am (UK time)

·        The conference call can be accessed live on the Burberry
website www.burberryplc.com (http://www.burberryplc.com) and can also be
accessed live via a listen only dial-in facility, click here
(https://secure.emincote.com/client/burberry/burberry049/vip_connect) to
register.

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

·        Burberry will issue its Interim results for the 26 weeks
ending 30 September 2023 on 16 November 2023

Certain statements made in this announcement 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. Nothing in this announcement should
be construed as a profit forecast. 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 announcement
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.

Burberry is listed on the London Stock Exchange (BRBY.L) and is a constituent
of the FTSE 100 index. ADR symbol OTC:BURBY. BURBERRY, the Equestrian Knight
Device, the Burberry Check, and the Thomas Burberry Monogram and Print are
trademarks belonging to Burberry.

www.burberryplc.com

LinkedIn: Burberry

Notes to editors

·          Burberry is a British luxury brand, headquartered in
London

·          At 1 July 2023, globally Burberry had 218 retail stores,
136 concessions, 57 outlets and 33 franchise stores, excluding pop-up stores.

 

APPENDIX

Based on effective FX rates as of 29 June 2023, in FY24 there is a c.£150m
headwind from exchange rate movements on revenue and a c.£70m headwind on
adjusted operating profit. This compares to guidance given in May for a
c.£70m headwind on revenue and a c.£40m headwind on adjusted operating
profit.

 

 Exchange rates    Forecast average effective rates      Actual average exchange rates
 £1=               29 June 2023       21 April 2023      FY23
 Euro              1.16               1.13               1.16
 US Dollar         1.26               1.24               1.20
 Chinese Yuan      9.07               8.57               8.27
 Hong Kong Dollar  9.87               9.75               9.43
 Korean Won        1,659              1,653              1,577

 

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