Results Centre Archive
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2011

• Strong financial performance
  • Revenue up 27% to £1.5billion
  • Retail/wholesale revenue up 29%; adjusted operating profit up 59%
  • Adjusted PBT up 39% to £298m; reported PBT £296m
  • Adjusted diluted EPS up 39% to 48.9p; reported diluted EPS 46.9p
  • Full year dividend up 43% to 20.0p
  • Net cash of £298m after £52m spend to date on China acquisition
• Key strategies continued to underpin operational progress
  • Double-digit revenue growth in retail and wholesale, in all regions and all product categories
  • Retail revenue up 36% to 64% of sales (2010: 60%)
  • Non-apparel revenue up 35% to 40% of sales (2010: 38%)
  • Product strategies drove growth especially in core outerwear, relaunched menswear and Burberry Prorsum and London
  • Further development of digital initiatives across all channels
  • Good progress on integration of Chinese operations
• Continued focus in FY 2012 on investing for growth
  • Capital expenditure planned at £180-200m (2011: £108m)
  • Emphasis on flagship openings and refurbishments in high profile locations including London, Chicago and Hong Kong
  • Accelerating new space growth to 12-13% and 15-20 major renovations
  • Enabled by brand momentum and improved productivity

All revenue metrics and commentary in the Group Financial Highlights and Business and Financial Review exclude the results of the discontinued Spanish operations. FY 2010 has been re-presented to show these results separately in discontinued operations.

Discontinued operations in FY 2011 include an operating loss of £2.1m (2010: nil), restructuring costs of £4.1m (2010: £45.4m) and a nil tax charge (2010: £25.0m).

“Adjusted” excludes:

1. Restructuring credit of £1.0m in 2011 (2010: £3.4m charge) relating to the Group’s cost efficiency programme announced in January 2009.
2. Put option liability finance charge relating to the 15% economic interest in the Chinese business of £3.2m (2010: nil).

Underlying change is calculated at constant exchange rates.

Certain financial data within this announcement have been rounded.

Revenue of £1,501.3m, up 27% at reported FX (2010: £1,185.1m)

Adjusted retail/wholesale operating margin at record level of 15.6% (2010: 12.7%), with 390 basis point improvement in gross margin partly offset by higher operating expenses, as guided

Adjusted profit before tax up 39% to £297.9m (2010: £214.8m)

Tax rate on adjusted profit before tax of 27.9% (2010: 27.4%), in line with guidance

Adjusted diluted earnings per share up 39% to 48.9p (2010: 35.1p)

Full year dividend per share up 43% to 20.0p (2010: 14.0p), broadly in line with 40% dividend payout ratio based on adjusted EPS

^* FY 2010 has been re-presented to show the results of the discontinued Spanish operations separately. Discontinued operations in 2011 include an operating loss of £2.1m (2010: nil), restructuring costs of £4.1m (2010: £45.4m) and a nil tax charge (2010: £25.0m) Adjusted measures exclude restructuring costs and the Chinese put option liability finance charge

^# Operating expenses in the table above exclude restructuring costs - a £1.0m credit in 2011 (2010: £3.4m charge) included in the reported expenses of £707.6m (2010: £544.7m). The net finance charge in the table above excludes a £3.2m Chinese put option liability finance charge (2010: nil) included in the reported finance charge of £6.4m (2010: £5.1m)

^~ EPS is calculated on a diluted basis

While mindful of the global macro challenges in 2011/12, Burberry remains confident in its strategies. With a strong financial position, Burberry will continue to invest for growth in the current year.

Revenue

The revenue guidance for retail, wholesale and licensing is consistent with that given in April 2011.

Operating margin

In FY 2010/11, Burberry delivered a record adjusted retail/wholesale operating margin of 15.6%. Gross margin and operating expenses will continue to be dynamically managed to enable further investment in the business:

• to evolve its business model, organisation and infrastructure (in areas including customer service, planning and supply chain) and
• to drive long-term growth (including flagship transitional costs and digital initiatives across all channels).

For FY 2011/12, Burberry expects to deliver a modest improvement in operating margin. However, with investment weighted to the first half operating margin in the six months to September 2011 is currently expected to be lower than in the same period last year.

Capital expenditure

Capital expenditure in FY 2010/11 was £108m, below guidance of around £130m, reflecting delayed cash outflow on certain projects.

In FY 2011/12, capital expenditure is planned at £180-£200m, partly reflecting this delayed spend from 2010/11. Given the brand momentum and increased store productivity, the year-on-year uplift is mainly in retail, balanced between new stores and refurbishments. New space growth is planned to accelerate to 12-13% (excluding acquired China stores), while the number of major renovations is planned to increase significantly to between 15 and 20.

Retail investment will be clustered in flagship markets, including London, Paris and Milan; Chicago; and Hong Kong, Shanghai and São Paulo.

Investment in IT business projects will continue at around £30m, with the emphasis on increasing connectivity between Burberry and its suppliers, employees, customers and partners.

The following guidance for retail, wholesale and licensing is consistent with that given in April 2011.

Retail

In the year to 31 March 2012, Burberry plans an increase of 12-13% in average retail selling space. This includes a net 20-25 additional mainline stores with a bias towards China, Latin America and the Middle East. In addition, the 50 stores acquired in China will add about 12% to average selling space in the first half of the year.

Wholesale

In the six months to 30 September 2011, Burberry projects wholesale revenue excluding China to increase by a mid teens percentage at constant exchange rates. Good progress is expected from the Americas, Travel Retail and Emerging Markets and sales of the global collection in Spain are expected to continue to contribute a low single-digit percentage to this growth.

Including China, wholesale revenue in the first half is projected to increase by a mid single-digit percentage at constant exchange rates (2010: £226m).

Licensing

In the year to 31 March 2012, Burberry expects licensing revenue at constant exchange rates to increase by a mid single-digit percentage. This assumes all Japanese apparel and non-apparel royalty income is received at contractual minimum levels as originally planned.

On this basis, underlying licensing revenue from Japan is expected to be broadly flat year-on-year. A step-up in royalty income from the apparel licence, which was negotiated in October 2009, will be offset by the planned termination of additional non-apparel licences in Japan. The global fragrance, eyewear and timepieces product licences are expected to deliver double-digit growth.

In the year to 31 March 2012, licensing revenue at reported FX is expected to increase by a high single-digit percentage, reflecting a more favourable yen hedge rate year-on-year.

Press release

26 May 2011 Preliminary results for the year ended 31 March (PDF)

Webcast

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Presentation

View the presentation (PDF)