REG - Burberry Group PLC - Third Quarter Trading Update

BurberryAnnouncement

24/01/2025 07:00

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RNS Number : 5302U  Burberry Group PLC  24 January 2025

24 January 2025

BURBERRY GROUP PLC

THIRD QUARTER TRADING UPDATE

"Since launching Burberry Forward in November, we have moved at pace to
advance our strategy to reignite brand desire, improve our performance and
drive long-term value creation. We are encouraged by the response to our "It's
Always Burberry Weather" outerwear campaign and "Wrapped in Burberry" festive
campaign. These activations resonated with a broad range of luxury customers
leading to an improvement in brand desirability and strength in outerwear and
scarves. The acceleration of our core categories reinforces our belief that
Burberry has the most opportunity where we have the most authenticity and that
our strategic plan will deliver sustainable, profitable growth over time.
However, we recognise that it is still very early in our transformation and
there remains much to do."

- Joshua Schulman, Chief Executive Officer

RETAIL REVENUE 13 WEEKS ENDED 28 DECEMBER 2024

                          28 December  30 December  % change
 £ million                2024         2023         Reported FX  CER*
 Retail revenue           659          706           -7%         -3%
 Comparable store sales*  -4%          -4%
 Contribution from space  +1%          +2%

*See page 3 for definition

Comparable store sales by region

 Q3 FY25 vs LY           Asia Pacific*  EMEIA  Americas
 Comparable store sales  -9%            -2%    +4%

*Asia Pacific consists of: Mainland China -7%, South Asia Pacific -19%, Japan
+4%, South Korea -12%

In the third quarter, we implemented the following actions to drive Burberry
Forward, generating an improvement in brand desirability, an acceleration in
the performance of outerwear and scarves, and an uplift in conversion:

·      Initiated brand reset with 360-degree "It's Always Burberry
Weather" outerwear campaign and "Wrapped in Burberry" festive campaign

·      Aligned product focus around recognisable brand signifiers, core
categories and good/better/best pricing in a luxury context

·      Enhanced visual merchandising in stores with festive windows
celebrating outerwear and scarves, the reintroduction of mannequins and cross
category styling; introduced new styling online to appeal to broad range of
luxury customers and digital innovation with our virtual scarf try-on
capability

·      Reunited Creative and Commercial teams in newly refurbished
headquarters in London, setting the stage for improved collaboration and
productivity

FY25 OUTLOOK

As previously communicated, 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.

While we recognise we are still early in our transformation, we are encouraged
by the response from customers and partners over the festive period. In light
of our Q3 performance, it is now more likely our second-half results will
broadly offset the first-half adjusted operating loss, notwithstanding the
uncertain macroeconomic environment.

 

RETAIL SALES PERFORMANCE

Q3 FY25 comparable store sales declined 4% in the period, with varying
performance in each region:

·      Americas grew 4%, boosted by local spend. Globally, the Americas
customer was in line with the regional performance. We were encouraged by
performance in the New York area where we concentrated local marketing efforts
after reopening our refurbished 57th St Store.

·      EMEIA decreased 2% with a similar decline in both locals and
tourists. Globally, the EMEIA customer group was flat.

·      Asia Pacific decreased 9% with Mainland China down 7%. Globally,
the Mainland Chinese customer was flat versus last year and contributed to the
4% increase in Japan. South Asia Pacific was down 19% and South Korea down
12%.

 

By product, outerwear and scarves continued to outperform globally. The
contribution from space was 1%, leading to a 3% decline in retail sales at
constant exchange rates. Currency was a 4% headwind in the quarter, with
retail revenue landing at £659m, down 7% at reported exchange rates.

 

The financial information contained herein is unaudited

 

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 store 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.

 

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
 Lauren Wu Leng  Head of Investor Relations               lauren.wuleng@burberry.com

 Media                                                    020 3367 3764
 Andrew Roberts  SVP, Corporate Relations and Engagement  andrew.roberts@burberry.com

 

·        There will be a presentation today at 9.00am (UK time) for
investors and analysts.

·        The presentation can also be viewed live on the Burberry
website https://www.burberryplc.com/ (https://www.burberryplc.com/) , you can
also click here (https://streamstudio.world-television.com/1349-2475-41023/en)
to register.

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

·        Burberry will issue its Preliminary Results for the 52 weeks
ending 29 March 2025 on Wednesday 14 May 2025.

 

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.

 

www.burberryplc.com

LinkedIn: Burberry

 

Notes to editors

·      Burberry is a British luxury brand, headquartered in London

·      Burberry is listed on the London Stock Exchange (BRBY.L) and is
a constituent of the FTSE 250 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.

·       At 28 December 2024, globally Burberry had 235 retail stores, 143
concessions, 54 outlets and 33 franchise stores, excluding pop-up stores.

 

APPENDIX

 

Based on effective FX rates as of 3 January 2025, in FY25 we now expect a
headwind of around £65m on revenue and around £25m on adjusted operating
profit.

 

 EXCHANGE RATES      FORECAST EFFECTIVE AVERAGE       ACTUAL AVERAGE EXCHANGE RATES

                     RATES FOR FY25
 £1=                 3 January 2025  25 October 2024  H1 FY25          FY24
 Euro                1.19            1.19             1.18             1.16
 US Dollar           1.27            1.29             1.29             1.26
 Chinese Renminbi    9.19            9.23             9.23             9.01
 Hong Kong Dollar    9.92            10.04            10.01            9.84
 Korean Won          1,779           1,779            1,746            1,657
 Japanese Yen        195             196              195              182

 

Detailed guidance for FY25

 Item                                Financial impact
 Impact of retail space on revenues  Space is expected to be broadly stable in FY25.

 Wholesale revenue                   Wholesale revenue is expected to decline by around 35% in FY25.
 Opex                                Initiated cost savings programme to unlock annualised savings of around £40m,
                                     with around £25m to be delivered in FY25, and of which £8m realised in H1
                                     FY25.
 Adjusting items                     Restructuring charge of around £20m in FY25, of which £12m was incurred in
                                     H1 FY25.
 Currency                            Based on 3 January effective foreign exchange rates the impact of year-on-year
                                     exchange rate movements is now expected to be around £65m headwind on revenue
                                     and around £25m headwind on adjusted operating profit.
 Capex                               Capex is expected to be around £150m.
 Dividend                            As we navigate this period, we have suspended dividend payments in respect of
                                     FY25 in order to maintain a strong balance sheet and our capacity to invest in
                                     Burberry's long-term growth.

Note: Guidance based on CER at FY24 rates

 

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