4. RETAIL REVENUE GREW 10%*
£16m £577m
£36m
£528m (£3m)
H1 2011 EXCHANGE NEW COMP H1 2012
RATES SPACE STORE
GROWTH
REVENUE
* UNDERLYING
7
RETAIL REVENUE GREW 10%
• COMPARABLE STORE SALES GREW 3%
– Q1 grew 6%
– Q2 grew 1%
– Footfall decelerated
• HIGHER QUALITY SALES GROWTH
– Increased average transaction values
– Modest price increases
– Mix improved
• Prorsum and London penetration up five percentage points
• Brit now 55% of mainline apparel; more footfall-driven
• 12% AVERAGE RETAIL SPACE GROWTH IN H1
– Focused on flagship markets including Hong Kong, Milan, Rome and London
– Opened net six stores and seven concessions
8
4
5. INVESTING IN FLAGSHIP MARKETS
REGENT STREET, LONDON
9
INVESTING IN FLAGSHIP MARKETS
• FULL YEAR CAPITAL EXPENDITURE
UNCHANGED AT £180-200M
– Re-tested projects against 25% IRR hurdle
– Half of spend in flagship markets
– About 14% average retail space growth
planned in H2
KNIGHTSBRIDGE, LONDON
10
5
6. WHOLESALE REVENUE grew 5%*
£248m (£7m) £12m £253m
H1 2011 EXCHANGE GROWTH H1 2012
RATES
REVENUE
* UNDERLYING
11
WHOLESALE REVENUE grew 5%
• H1 IN LINE WITH GUIDANCE
• OUTLOOK FOR H2
– More cautious approach from customers globally
– Broadly unchanged revenue year-on-year at constant FX
• FOCUS ON QUALITY OF SALES
– Continuing correction of legacy distribution and products
– Growth led by US department stores, Asia Travel Retail and emerging markets
12
6
7. LICENSING REVENUE DOWN 5%*
£54m £1m (£3m) £1m
£53m
H1 2011 EXCHANGE NON - GROWTH H1 2012
RATES RENEWALS
REVENUE
* UNDERLYING
13
LICENSING REVENUE DOWN 5%
• DOWN 3% AT REPORTED FX
– Consistent with full year guidance
• CORRECTING LEGACY ISSUES IN JAPAN COST £3M
• PREPARING FOR JAPAN APPAREL TRANSITION TO GLOBAL COLLECTION
• GLOBAL PRODUCT LICENCES
– Solid growth across categories
– Launch of The Britain watch
• OUTLOOK FOR FY 2013
– Broadly unchanged revenue year-on-year at constant and reported FX
14
7
9. BALANCED BY REGION
REST OF WORLD: 7%
14% GROWTH
ASIA PACIFIC: 36%
AMERICAS: 24% 11% GROWTH
5% GROWTH
EUROPE: 33%
8% GROWTH
H1 2012 RETAIL/WHOLESALE REVENUE
% growth on underlying basis
17
BALANCED BY REGION
• ASIA PACIFIC GREW 11%
– Hong Kong robust, if uneven; Pacific Place and Russell Street openings
– Korea and Taiwan weak; Singapore and Japan good
– China 12% of group retail/wholesale revenue
• Slowdown footfall-driven
• More purchases at higher transaction values
• Continue to invest in this high potential market
• EUROPE GREW 8%
– France and Germany robust; Italy weak
– UK impacted by Olympic disruption
• AMERICAS GREW 5%
– Wholesale outperformed retail
– Retail more dependent on domestic consumer
– H2 openings in Brazil, Mexico and Chicago
• REST OF WORLD GREW 14%
– Retail still variable
– Double-digit growth in wholesale
18
9
10. ASIA PACIFIC GREW 11%
PACIFIC PLACE, HONG KONG
19
CHINA GREW mid-teens %
• CONTINUE TO INVEST IN THIS HIGH POTENTIAL
MARKET
– Increasing wealth
– Fast growing domestic luxury demand
– Outbound travel increasing
SINA WEIBO
20
10
11. EUROPE GREW 8%
VIA MONTENAPOLEONE, MILAN OLYMPICS 2012 CLOSING CEREMONY
21
AMERICAS GREW 5%
MICHIGAN AVENUE, CHICAGO
22
11
12. BALANCED BY PRODUCT DIVISION
CHILDRENS: 4%
5% GROWTH
MENS: 25%
12% GROWTH
ACCESSORIES: 39%
8% GROWTH
WOMENS: 32%
6% GROWTH
H1 2012 RETAIL/WHOLESALE REVENUE
% growth on underlying basis
23
BALANCED BY PRODUCT DIVISION
• BALANCED ASSORTMENT BY LABEL, CATEGORY AND PRICE POINT
– Constant evolution
• SOLID CORE OF LARGE LEATHER GOODS, OUTERWEAR AND REPLENISHMENT
• GROWTH INITIATIVES SUCCESSFUL
– Mens tailoring
– Mens accessories
– Soft accessories
24
12
14. STACEY CARTWRIGHT
—
EVP, CHIEF FINANCIAL OFFICER
27
FINANCIAL HIGHLIGHTS
SIX MONTHS TO 30 SEPTEMBER 2012 2011
£M £M GROWTH
REVENUE 883 830 6%
ADJUSTED PBT 173.4 161.6 7%
ADJUSTED DILUTED EPS 29.0p 26.9p 8%
NET CASH 237 174 36%
DIVIDEND PER SHARE 8.0p 7.0p 14%
28
14
15. ADJUSTED OPERATING PROFIT GREW 7%
£12.0m (£2.8m) £173.6m
£162.1m £2.3m
H1 2011 EXCHANGE RETAIL/ LICENSING H1 2012
RATES WHOLESALE
ADJUSTED OPERATING PROFIT
29
RETAIL/WHOLESALE PROFIT GREW 11%
SIX MONTHS TO 30 SEPTEMBER 2012 2011
£M £M CHANGE
RETAIL/WHOLESALE REVENUE 829.9 775.3 7%
GROSS MARGIN 574.4 517.6
AS % OF REVENUE 69.2% 66.7% 250bp
OPERATING EXPENSES (445.5) (401.9)
AS % OF REVENUE (53.7%) (51.8%) (190bp)
ADJUSTED OPERATING PROFIT 128.9 115.7 11%
AS % OF REVENUE 15.5% 14.9% 60bp
GOAL REMAINS TO MANAGE GROSS MARGIN AND OPERATING EXPENSES DYNAMICALLY
TO DELIVER MODEST OPERATING MARGIN IMPROVEMENT IN FY 2013
30
15
16. RETAIL/WHOLESALE
GROSS MARGIN GREW 250BP
69.2%
66.7%
64.3%
56.8% 57.6%
H1 2008 H1 2009 H1 2010 H1 2011 H1 2012
RETAIL AS % OF GROUP SALES 45% 56% 57% 64% 65%
GROSS MARGIN
31
RETAIL/WHOLESALE
GROSS MARGIN GREW 250BP
• GROSS MARGIN AT 69.2%
• DRIVEN BY
– Modest price increases
– FX benefits, especially euro
– Continued shift to retail
32
16
17. RETAIL/WHOLESALE
OPERATING EXPENSES/REVENUE AT 53.7%
53.7%
49.5% 51.8%
46.9%
43.9%
H1 2008 H1 2009 H1 2010 H1 2011 H1 2012
RETAIL AS % OF GROUP SALES 45% 56% 57% 64% 65%
ADJUSTED OPERATING EXPENSES/REVENUE
33
RETAIL/WHOLESALE
OPERATING EXPENSES/REVENUE AT 53.7%
• OPERATING EXPENSES UP 11% OR £44M
• DRIVEN BY
– £15m reduction in performance-related payments
– New retail space
– General inflation
– Investment in front and back of house
– Tight control of discretionary spend
34
17
18. LICENSING PROFIT
SIX MONTHS TO 30 SEPTEMBER 2012 2011
£M £M
REVENUE 52.6 54.3
GROSS MARGIN AT 100% 52.6 54.3
OPERATING EXPENSES (7.9) (7.9)
OPERATING PROFIT 44.7 46.4
OPERATING MARGIN 85.0% 85.5%
YEN HEDGE RATE 125 135
H1 2012 INCLUDES FX BENEFIT OF £1.1M IN REVENUE AND NIL IN OPEX
35
36
18
19. INCOME STATEMENT
SIX MONTHS TO 30 SEPTEMBER 2012 2011
£M £M
ADJUSTED OPERATING PROFIT 173.6 162.1
NET FINANCE CHARGE (0.2) (0.5)
ADJUSTED PROFIT BEFORE TAX 173.4 161.6
EXCEPTIONAL ITEMS (61.5) (2.9)
PROFIT BEFORE TAX 111.9 158.7
TAX (26.5) (42.8)
DISCONTINUED OPERATIONS 0.1 0.6
NON-CONTROLLING INTEREST (0.5) 0.7
ATTRIBUTABLE PROFIT 85.0 117.2
37
INCOME STATEMENT
• NET FINANCE CHARGE OF £0.2M
– Facility fees offset income on cash balance
• EXCEPTIONAL ITEMS OF £61.5M
– £73.8m termination of fragrance and beauty licence relationship charge
– £11.7m China put option liability finance credit
– £0.6m restructuring credit
• EFFECTIVE TAX RATE OF 25% ON ADJUSTED PBT
• NON-CONTROLLING INTEREST OF £0.5M
– Reflects profit in China and Middle East partially offset by losses in Japan and India
38
19
20. CASH INFLOW FROM OPERATIONS
SIX MONTHS TO 30 SEPTEMBER 2012 2011
£M £M
ADJUSTED OPERATING PROFIT 173.6 162.1
DISCONTINUED OPERATIONS 0.1 0.6
RESTRUCTURING SPEND (0.6) (6.2)
DEPRECIATION AND AMORTISATION 48.6 39.5
EMPLOYEE SHARE SCHEME COSTS 10.2 16.0
INCREASE IN INVENTORIES (42.3) (90.3)
INCREASE IN RECEIVABLES (48.1) (43.9)
(DECREASE)/INCREASE IN PAYABLES (5.8) 27.2
OTHER NON-CASH ITEMS 2.6 0.3
CASH INFLOW FROM OPERATIONS 138.3 105.3
39
40
20
21. MOVEMENT IN NET CASH
£138m (£89m)
(£47m)
£338m (£79m)
(£28m)
£4m £237m
MAR 2012 OPERATING INVESTMENT TAX DIVIDENDS ESOP TRUST OTHER SEP 2012
CASHFLOW PURCHASES
41
TOTAL CASH FLOW
SIX MONTHS TO 30 SEPTEMBER 2012 2011
£M £M
CASH INFLOW FROM OPERATIONS 138.3 105.3
CAPITAL EXPENDITURE (88.8) (63.0)
CAPITAL CONTRIBUTIONS FROM JV PARTNERS 0.4 4.9
ACQUISITIONS (1.0) (11.0)
NET INTEREST 0.6 (0.5)
TAX PAID (46.8) (48.7)
FREE CASH FLOW 2.7 (13.0)
DIVIDENDS (78.6) (68.4)
ESOP TRUST PURCHASES/OTHER (27.3) (41.8)
EXCHANGE DIFFERENCE 2.1 (0.5)
TOTAL CASH FLOW (101.1) (123.7)
NET CASH AT 31 MARCH 338.3 297.9
NET CASH AT 30 SEPTEMBER 237.2 174.2
42
21
22. Strong financial position
—
Goal is to deliver further modest
improvement in FULL YEAR
retail/wholesale margin
—
Balancing EXPENSE control AND
investment
43
FY 2013 OUTLOOK
FY 2013 Modest retail/wholesale adjusted operating margin improvement
RETAIL About 14% increase in average retail selling space in H2
WHOLESALE Broadly unchanged underlying revenue in H2
LICENSING Broadly unchanged revenue year-on-year in FY 2013
- At constant and reported FX
INTEREST Broadly nil
DEPRECIATION Around £110m in FY 2013
UNDERLYING TAX RATE 25% for FY 2013
DIVIDEND POLICY Approximate 40% full year payout based on adjusted diluted EPS
CAPITAL EXPENDITURE £180-200m in FY 2013
44
22
23. Directly operating
FRAGRANCE AND BEAUTY
• STRATEGIC RATIONALE
– Greater brand control
– Significant opportunities
• ENDED LICENCE RELATIONSHIP FROM 31
DECEMBER 2012
– Original expiry date 31 December 2017
– Payment of €181m to Interparfums on 31
December 2012
– Three month extension of licence relationship to
31 March 2013
– Directly operating from 1 April 2013
45
FRAGRANCE AND BEAUTY
accounting impact
• ACCOUNTING RULES REQUIRE €181M (£142M)
PAYMENT TO BE EXPENSED BY 31 DECEMBER 2017
• £71M CAPITALISED AS AN INTANGIBLE ASSET IN H1
– Annual amortisation charge of £15m
• Non-cash
• Reported in exceptional items
– Purchase of intangible asset excluded from full year capital
expenditure guidance of £180-200m
• £74M RECOGNISED AS EXPENSE IN H1
– Includes £2.5m of related costs
– Reported in exceptional items
46
23
24. Fragrance and beauty
estimated financial impact
FY 2013 FY 2014
£M £M
WHOLESALE REVENUE - 140
RETAIL/WHOLESALE OPERATING PROFIT - 25
LICENSING REVENUE/PROFIT - (25)
ADJUSTED PBT* - -
EXCEPTIONAL ITEMS
H1 TERMINATION CHARGE (74) -
H2 SET-UP COSTS (5-10) -
ANNUAL AMORTISATION CHARGE - (15)
* INTEREST INCOME REDUCED BY C.£1M IN FULL YEAR
47
FRAGRANCE AND BEAUTY
ESTIMATED FINANCIAL IMPACT
• FY 2013
– No impact on retail/wholesale revenue and operating profit
– No change to licensing guidance
– Minimal impact on adjusted PBT
• Financing costs only for Q4
– H2 exceptional charge for set-up costs of £5-10m
• FY 2014 – A TRANSITION YEAR
– Wholesale revenue expected to be about £140m, H2 weighted
– Incremental retail/wholesale operating profit of around £25m, H2 weighted
– Reduction of licensing revenue/profit of about £25m
– Broadly neutral to adjusted PBT
• c.£1m financing cost
48
24
26. Directly operating
FRAGRANCE AND BEAUTY
• TIMING IS RIGHT
– One-off opportunity before 2018
– Burberry brand has evolved
• UNDER-PENETRATED IN FRAGRANCE AND BEAUTY
51
BENEFITS OF BRAND INTEGRATION
• MOST WIDELY ENCOUNTERED PROJECTION
OF BRAND
– Opening price point
– Brand media spend
• INTEGRATED MARKETING
– Cohesive media campaign
– Scale advantages in placement and cost
• SYNERGISTIC RELATIONSHIP WITH FASHION
• ALIGN DISTRIBUTION
• IN LINE WITH STRATEGY
– Core activity/ownership mindset
52
26
27. INNOVATIVE LAUNCH OF
BURBERRY BODY
53
ESTABLISHED CATEGORY WITH STABLE
GROWTH
€57bn
€55bn
€47bn
€42bn
ACCESSORIES APPAREL HARD LUXURY PERFUME AND COSMETICS
GROWTH RATES 2011-12E +14% +10% +13% +5%
2012E REVENUE
SOURCE: BAIN/ALTAGAMMA
54
27
28. UNDER-PENETRATED IN FRAGRANCE
RTW AND ACCESSORIES FRAGRANCE AND BEAUTY
BRAND A
BRAND B
BRAND C
BRAND D
BURBERRY
SOURCE: BURBERRY ESTIMATES
55
Nascent business IN BEAUTY
CHANEL DIOR YSL ARMANI BURBERRY
SOURCE: BURBERRY ESTIMATES
56
28
29. Matt mcevoy
—
Svp, strategy AND new business
development
57
PRODUCT portfolio
58
29
30. BUILDING THE BODY pillar
SEPT 2011 MARCH 2012 SEPT 2012 2013
EAU DE EAU DE
ROSE GOLD BODY TENDER
PARFUM TOILETTE
59
ALIGNING THE PYRAMID
60
30
31. BEAUTY product strategy
• TEST ESTABLISHED BASE
– Launched two years ago
– Currently in 90 doors
• INCREASE PACE OF SEASONAL PRODUCT
INTRODUCTIONS
– Similar to fashion flow
– While continuing to build the base
• INTENSIFY MARKETING EFFORT
• EXPAND NUMBER OF DOORS
61
62
31
32. HISTORICAL MODEL
BURBERRY INTERPARFUMS THIRD PARTIES
DESIGN PRODUCT DEVELOPMENT
MANUFACTURING
CREATIVE SOURCING
MARKETING AND PR INVENTORY MANAGEMENT
SALES & DISTRIBUTOR
LOGISTICS
MANAGEMENT
DISTRIBUTOR NETWORK
63
RUNNING THE BEAUTY DIVISION
BURBERRY THIRD PARTIES
DESIGN
MANUFACTURING
CREATIVE
MARKETING AND PR
PRODUCT DEVELOPMENT LOGISTICS
SOURCING
INVENTORY MANAGEMENT
SALES & DISTRIBUTOR DISTRIBUTOR NETWORK
MANAGEMENT
64
32
33. Transition arrangements
• SIGNIFICANT BUSINESS INTEGRATION EXPERIENCE
• TRANSITION PLAN WITH INTERPARFUMS
– Three month extension
– Progressive transfer of processes and projects
65
Integration work underway
• DIALOGUE WITH DISTRIBUTORS
• SOURCING/LOGISTICS TEAMS SECURING
PRODUCT FLOW
• IT INTEGRATION IN PROGRESS
• HR SUPPLEMENT EXISTING CAPABILITIES
66
33
34. BURBERRY BEAUTY
THE FIFTH PRODUCT DIVISION
• LEVERAGING OUR EXISTING
INFRASTRUCTURE AND PEOPLE
– Functional experience already exists in key areas
– Reallocating internal resource
• ATTRACTING NEW TALENT FROM RELEVANT
INDUSTRIES
67
Burberry’s fifth
Product division
68
34
35. FURTHER FINANCIAL GROWTH
—
‘PAY AS YOU GO’ IN ACTION
—
EXECUTE KEY STRATEGIES
—
INVEST FOR GROWTH
69
70
35
36. APPENDIX
71
DISCLAIMER
Certain statements made in this presentation 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.
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 presentation 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, the Equestrian Knight Device and the Burberry Check are trademarks belonging to Burberry
which are registered and enforced worldwide.
72
36
37. ADJUSTED MEASURES
All metrics and commentary in the this presentation exclude the results of the discontinued business in
Spain and exceptional items, unless stated otherwise.
Exceptional items are:
A charge of £73.8m relating to the termination of the fragrance and beauty licence relationship (2011:
nil).
A restructuring credit of £0.6m (2011: nil).
A put option liability finance credit of £11.7m relating to the third party 15% economic interest in the
Chinese business (2011: charge of £2.9m).
Underlying change is calculated at constant exchange rates.
Certain financial data within this announcement have been rounded.
73
IR CONTACTS
Fay Dodds Horseferry House
Director of Investor Relations Horseferry Road
fay.dodds@burberry.com London
SW1P 2AW
Charlotte Cowley Tel: +44 (0)20 3367 3524
Investor Relations Manager
charlotte.cowley@burberry.com
www.burberryplc.com
Adam Wright www.burberry.com
Investor Relations & New Business Development Manager www.artofthetrench.com
adam.wright@burberry.com www.facebook.com/burberry
www.twitter.com/burberry
Kim Warren www.youtube.com/burberry
Investor Relations Associate https://plus.google.com/+Burberry
kim.warren@burberry.com
74
37
