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Annual Report
2018/19

Founded in 1856, burberry is a global luxury brand with a distinctly british attitude.

Chairman’s

Letter

“We are currently at the apex of our creative transition and we are managing the business dynamically through this exciting but challenging transformation.”

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Leadership statements

Ceo’s

Letter

“Over the course of the coming year, we will continue to build the new Burberry. We are energised by the early results.”

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Strategy

In November 2017, we set out our multi-year strategy to establish our position firmly in luxury fashion, inspiring luxury customers and delivering long-term sustainable value for our shareholders.

Two Phased Transformation journey

Build the foundation

FY 2018/19 AND FY 2019/20

  • Commence programme to re-energise the brand
  • Rationalise and invest to align our distribution
  • Manage creative transition
Accelerate and grow

FY 2020/21 ONWARDS

  • Complete full brand transformation, including alignment of distribution
  • Accelerate growth
P R O D U C T D I S T R I B U T I O N C O M M U N I C A T I O N D I G I T A L O P E R A T I O N A L E X C E L L E N C E I N S P I R E D P E O P L E T W O E N A B L E R S F O U R R E V E N U E D R I V E R S

Progress during the year

It’s a new era for Burberry. In the last financial year, we started to transform our brand for the future and to ignite brand heat around our new creative vision.

Product is at the heart of our strategy and brand vision. We are focused on re- energising our product offering to signal immediate and visible change, and win the attention of luxury consumers, while retaining our core customer. In the first year of transition we worked to evolve our assortment to align with Riccardo Tisci’s creative vision. Our progress included the development of our product calendar to deliver frequent newness, the evolution of our leather goods strategy, and our commitment to going fur-free.

Spring/Summer 2019 show

Spring/Summer 2019 show

Kingdom, Riccardo Tisci’s debut collection, paid homage to the individuality, eccentricity and inimitable attitude of Britain. The collection, unveiled during London Fashion Week in September, celebrated creativity and style traditions, from the punk and rebellious to the formal and refined. It defined a new visual language and lexicon for Burberry. Rankings from Vogue.com and the Financial Times indicated that the show was the second most viewed collection in September 2018. Products started to reach stores globally at the end of February 2019 and initial signs around the launch of the wider collection are very encouraging, with customers and wholesale partners responding positively.

Autumn/Winter 2019 show

Autumn/Winter 2019 show

For Autumn/Winter 2019, Riccardo Tisci evolved the cues and codes set out in his debut collection, taking inspiration from the contrasts in British culture, weather and marine themes. The collection, Tempest, was unveiled in February in two contrasting show environments within the Tate Modern Tanks in London. One space was more structured, traditional and formal, with rigid wood seating set above a dimly lit runway, while the other was more rebellious and played host to more than 100 young people who scaled the walls of the venue.

Burberry & Vivienne Westwood

Burberry & Vivienne Westwood

In December, we collaborated with legendary designer Vivienne Westwood, releasing a limited-edition collection of her iconic pieces re-imagined in Burberry Vintage Check. British Vogue described this as “one of the most unexpected and exciting collaborations of the year.” The launch drove a significant uplift in traffic to Burberry.com, while the Vintage Check beret sold out online within two hours. Burberry and Vivienne Westwood were united by a shared vision to support and promote Cool Earth, a UK-based non-profit organisation that works alongside rainforest communities to halt deforestation and climate change.

A focus on leather goods

A focus on leather goods

During the year, we enhanced our leather goods offering and expanded our product architecture by launching new leather handbag styles and updating our classic styles. We improved the prominence of our handbags within our retail network and supported new shapes through dedicated social media and marketing content. For example a travelling global pop-up store concept, the Burberry Conservatory, visited 11 cities to market the Belt Bag.

In September 2018, we completed the acquisition of a division of a long-standing Italian partner and created a new centre of excellence known as Burberry Manifattura. This covers all activities from prototyping, product innovation and engineering to the co-ordination of production.

With over 100 expert craftsmen and craftswomen specialising in the development of luxury handbags and accessories, Burberry Manifattura gives us greater control over quality, cost, delivery and sustainability of our leather goods.

Our communications approach is product led and tailored for social channels. In this phase we have focused on re-energising our brand and reaching consumers through influencers and key opinion leaders. Key focuses for FY 2018/19 were bringing Riccardo Tisci’s creative vision to life, re-igniting brand heat and shifting consumer perceptions.

Relaunching our brand

Relaunching our brand

In 2018, we collaborated with graphic designer Peter Saville on a new logo alongside a refreshed Thomas Burberry monogram inspired by our heritage. To bring this to life for our customers, we created high-impact activations and brand experiences to major fashion cities worldwide. This included wrapping the outside of high-profile stores in Milan, Hong Kong and Seoul in the Thomas Burberry monogram and displaying large-scale Thomas Burberry Bears in New York, Shanghai and London. We reached more than 60 million consumers directly with these activations and the impact was amplified through social networks, influencers and press.

Discover our new monogram
Delivering newness with B Series

Delivering newness with B Series

In September, we launched B Series, limited-edition product drops released on the 17th of each month for a restricted time period and sold predominantly through social media platforms. B Series resonated strongly with new and young consumers and was endorsed by key influencers around the world. This new go-to market model of frequent product drops keeps our customers engaged and excited by continued newness. B Series won a Webby award in 2019 and is a significant contributor to our overall improving social engagement.

Follow us on Instagram
Social first

Social first

Over the year, we re-imagined the content and cadence of our social media presence, with an increased frequency of posts, tailored social media campaigns and a deeper focus on products. This approach was exemplified by B Series. As a result of this social-first strategy, we have seen significant improvements across reach, engagement and volume of followers.

Follow us on Instagram
Evolving our influencer approach

Evolving our influencer approach

Over the year, we re-imagined the content and cadence of our social media presence, with an increased frequency of posts, tailored social media campaigns and awe have expanded our approach to influencers, aligning with our new creative vision to stretch from global personalities to emerging influencers, whose posts resonate strongly with smaller but highly engaged audiences. We focused on building communities to encourage conversation with our target audience, through a programme of product engagement activities including dressings, drops and bespoke pieces for global personalities. This resulted in many of the most-followed lnstagram users engaging with the brand on social media over FY 2018/19, while multiple emerging names shared our shows and capsule collections. We also created unique experiences for our influencers, such as the Vivienne Westwood & Burberry launch party. This approach was exemplified by B Series. As a result of this social-first strategy, we have seen significant improvements across reach, engagement and volume of followers.

Follow us on Instagram
A Burberry Christmas

A Burberry Christmas

Our Christmas campaign “Close Your Eyes and Think of Christmas,” celebrated the eccentricity of a British Christmas and featured an all-star cast, including Kristin Scott-Thomas, M.I.A., Matt Smith, Naomi Campbell and Valerie Campbell, Naomi’s mother.

From the unpredictable British weather, to family togetherness, delayed trains and feasts, British artist and photographer Juno Calypso captured Christmas traditions and rituals through a subversive and original lens.

Burberry is changing and we are evolving our distribution network to reflect the brand’s new positioning in luxury fashion. To ensure the in-store Burberry experience reflects our vision for the brand, a refurbishment programme for our retail stores is underway and we are enhancing our level of customer service. We are also rationalising our non-luxury wholesale and retail doors. We made progress across each of these areas in FY 2018/19, with highlights including our retail store refreshes, our wholesale transition, and upgrades to our customer experience.

Regent Street experience

Regent Street experience

To coincide with Riccardo Tisci’s first collection for Burberry, we re-imagined our 121 Regent Street flagship store for September 2018 celebrating the past and future of Burberry. Inspired by the building’s history as a cinema, each room was decorated with draped curtains and luxuriously carpeted floors. Trench-inspired hues, ranging from stone to honey, featured throughout the store alongside accents of rose and pistachio. Individual rooms were also curated to celebrate iconic products, such as The Heritage Trench Coat and The Car Coat, while another room was dedicated entirely to the Vintage Check. At the heart of the newly transformed space was “Sisyphus Reclined,” an immersive and interactive art installation by artist Graham Hudson.

Enhancing our customer experience

Enhancing our customer experience

To enhance our customer service proposition in stores, we implemented a new programme to improve front and back of house capabilities in more than 50 of our top stores. In addition, across the wider store network, we enhanced sales associate digital tools, rolled out merchandise-led retail associate training programmes and held regional retail leadership conferences to better align skills globally and engage our teams to deliver exemplary luxury service.

Enhancing our mainline stores

Enhancing our mainline stores

We translated our new creative vision to our stores with a new architectural and visual concept to align with our luxury positioning. We aligned 14 of our stores to the new creative aesthetic including Regent Street and Bond Street in London, 57th Street in New York City, Kerry Centre in Shanghai and Cheongdam-dong in Seoul. At the same time, we continued to refine our directly operated store network to fully reflect our luxury positioning, closing 18 net stores in the year.

We took a segmented approach to our store refresh programme, tailoring each store to its location while reflecting our new creative vision. In our Bond Street store, we created a floral room, with fashion photographer Nick Knight's photograph of a rose covering the entire space from floor to ceiling. In contrast, men's streetwear was showcased in an "under construction" room, which was stripped to its shell, complete with concrete flooring. Customers were invited to graffiti the walls.

Evolving our wholesale footprint

Evolving our wholesale footprint

We made significant progress evolving our wholesale distribution. We accelerated the rationalisation and relocation of non-luxury doors in the US. We also entered new image-driving doors around the world to reach new customers and reinforce our brand positioning. Luxury wholesale clients responded positively to the new creative vision and product aesthetic, with a number of high-profile activations around the launch of our Spring/Summer 2019 collection in February, such as our window takeovers and pop-ups at Barneys across the US and Isetan in Tokyo.

We are finding new and exciting ways to engage customers by displaying highly curated product assortments and personalised stories and editorialising our website. We are improving our omnichannel experience to enable more flexibility around payment and delivery options as well as seamless switching between physical and digital channels. We are also growing and strengthening our digital partnerships. We made progress across each of these areas in FY 2018/19, with highlights including the launch of social selling; the expansion of digital third party relationships; the evolution of Burberry.com, and the enhancement of our personalisation capabilities.

Evolving Burberry.com

Evolving Burberry.com

During the year we significantly evolved Burberry.com to align with our new brand positioning and deliver improved functionality and more immersive storytelling. This included introducing fresh and curated editorial content with more frequency, and enhancing all our product pages with styling suggestions and easy-to-navigate product and brand information.

Explore Burberry.com
Enhancing personalisation

Enhancing personalisation

Delivering a personalised experience is important across all our brand touchpoints, and digital is a key enabler. One area of focus has been the interaction between our online and offline customer experiences by creating a link between the highly personal service we offer in our stores and the personalisation available through our digital channels. This year we introduced the “For You” page on Burberry.com, which shows customers suggested products, store locations and relevant capsule collections. On the Burberry app, we launched a function to allow sales associates to communicate directly with customers, offering one-to-one service at any time. This channel of communication was also used to offer exclusive opportunities to select customers, including early access to new products.

Partnerships

Partnerships

In line with our strategy, we have made good progress with digital third parties. Over FY 2018/19 we partnered with lnstagram and WeChat to launch social shopping for the first time. We became the first luxury brand to integrate our full Chinese stock onto the WeChat platform, allowing customers to pay through WePay. In March, we became one of only six luxury businesses to partner with lnstagram on the launch of an integrated shopping experience, allowing customers to navigate products within the app and use integrated payment systems, such as Apple Pay. We have also continued to deepen our relationship with Farfetch, enabling customers to access our full range of inventory in more than 150 countries, and rolling out access to our regional fulfilment hub for US customers.

We are focused on increasing Burberry’s flexibility and agility, optimising our performance against the backdrop of a rapidly changing business environment. Over the year we made good progress across all of these areas, evolving our supply chain to support our new strategic ambitions; delivering new technology to support customers’ experience in store, and delivering cumulative savings of £105 million in FY 2018/19, ahead of plan.

Improving simplification and efficiency

Improving simplification and efficiency

Burberry Business Services (BBS), our shared service centre in Leeds which opened in 2017, has continued to embed and expand its role in the business. Now employing 400 people across five core functions, BBS is a central part of our efforts to simplify processes across our business, ensuring we are as focused and streamlined as possible.

We continued to focus on achieving procurement savings this year. Through a managed service provider we launched new technology to simplify and centralise our management of contingent labour. In addition, we simplified a number of our buying, payment and administrative process tasks, reducing the level of manual intervention and ensuring purchases are processed quickly and efficiently.

Partnering with our suppliers

Partnering with our suppliers

“Johnstons have supplied Burberry since 1900 and we have never worked more closely than we do today. This year we received accreditation for self-inspection, meaning that Burberry’s high quality standards are assured at our mill and not rechecked in Burberry distribution centres. This was a huge statement of trust in our ability, which was founded upon more than a year of training and testing, alongside the development of shared information and audit processes. The net result is a leaner supply chain, with right-first-time quality and better delivery performance to the store. While the pace of change and level of innovation when working with Burberry can be daunting, it also feels like a shared endeavour, as with challenge comes support. We feel like partners in a common supply chain, rather than simply vendors. We share a lot of values with Burberry and their support allows us to move forward more quickly than we otherwise could on sustainability projects. The elimination of harmful chemicals from the supply chain, our involvement with the Sustainable Fibre Alliance to support cashmere herders in Mongolia, and recycling and energy management projects all benefit from our partnership.”

CHRIS GAFFNEY Group Finance Director and Managing Director Elgin Mill, Johnstons of Elgin

Developing a more agile supply chain

Developing a more agile supply chain

Our progress in supply chain has supported our go-to market model of frequent product drops. Our internal supply chain teams and external partners have collaborated to create new ways of working, simplifying decision-making and implementing technology to speed up processes.

We have been enhancing the quality and efficiency of our supply chain. All priority category product is inspected before leaving the manufacturer and we have introduced an accreditation programme in quality management for top suppliers. We also continued to make progress on our multi-year business and IT transformation programme to improve omnichannel capabilities globally. This will enable us to transform our ways of working and optimise our product flow, delivering better lead times for customers. Additionally, we relocated our Asia hub, successfully optimising our product flow into Asia and increasing operational synergies.

Using technology to support our in-store experience

Using technology to support our in-store experience

One key focus over the year has been supporting the retail associate experience and elevating Customer Service. We completed the deployment of our global standardised point-of-sale system in all but a handful of stores, with the remainder on track to complete in early FY 2019/20. In addition, all sales associates received access to our new mobile-based client engagement tool, R-World. To enhance our customer engagement through this channel, we are developing a comprehensive road map for evolving R-World and how it is used, based on input from our sales associates.

Throughout the year, we continued to enhance our omnichannel capabilities globally and made good progress in the transformation of the entire IT function. This included completing the establishment of our IT team within BBS, enhancing our cybersecurity capabilities and strengthening ways of working with strategic partners.

We are committed to making Burberry the best place to work for our 10,000 colleagues across 33 countries. We have designed an ambitious Inspired People agenda to deliver this goal, with work focused on leadership; culture and engagement; talent and capabilities; ways of working; and responsibility. While our programme has a multi-year horizon, we made good progress over FY 2018/19, which has been reflected in positive early results, including an improvement in employee engagement and a decrease in attrition. Employee engagement overall has risen by two points to 74%, and 87% of our people are proud to work at Burberry.

Leadership

Leadership

We are focused on building capability and driving engagement notably in our design, product and digital teams. We have prioritised deepening capability in the areas most critical to delivering our strategy. The Burberry Leaders group, made up of our most senior employees globally, is responsible for galvanising the organisation and delivering our strategic goals.

To further strengthen the capability of our leadership population and accelerate delivery of our strategy, this year we launched our new Leadership Development Programme, delivered over nine months and including 360 feedback, tailored coaching and support, and an intensive three-day gathering of global leaders. Over 80 of our most senior leaders have completed the programme with all other leaders to be enrolled by the end of FY 2019/ 20. The programme is grounded in the Burberry Behaviours, which were launched in 2018 and underpin the way we work.

Our annual Global Icon Awards celebrate the employees who best bring to life these behaviours day to day. The Behaviours are: Putting Customers First; Being Bold And Open to New Ideas; Being One Team; and Being Accountable And Responsive.

The Burberry Leaders group has also led the engagement of the wider business in our strategy. To ensure leaders are fully equipped to do this, we increased communication and engagement across this group, for example hosting a global Strategy Offsite in June 2018. Focus on this area has driven clear results, with our engagement survey showing significant improvement in employee understanding of our Company direction.

Culture

Culture

At Burberry, we have always sought to build a culture that is diverse, open and inclusive and one where all perspectives are valued. We value and respect people of all cultures, nationalities, races, religions and ethnicities, regardless of characteristics such as gender, gender identity and/or expression, age, disability or sexual orientation. We are passionate about attracting, developing and rewarding the most talented and skilled individuals and ensuring they feel a sense of belonging. At our London headquarters, 60 different nationalities are represented.

Over the last 12 months, we continued to focus on evolving strategies for recruiting and developing key talent within the business in a way which promotes our cultural values. We are committed to delivering training for all managers on how to build an inclusive environment, as well as unconscious bias training for al l employees. We are also expanding our scholarship programme, which supports students who would not otherwise have the financial resources to attend top fashion schools, and offer one-year placements postgraduation to provide valuable work experience.

With respect to our senior women, we are proud to have the highest representation of women in Executive Committee and direct report positions (58.5%) in the FTSE 100. This was recognised in the 2018 Hampton Alexander Review where Burberry was named the top performer.

We offer continued support for the LGBTQ+ community through our ongoing membership of LGBTQ+ group INvolve. As part of this membership, we have nominated senior LGBTQ+ leaders onto a board-readiness programme and senior Burberry leaders have mentored LGBTQ+ employees from other organisations. Broadening and deepening our Diversity and Inclusion agenda is a key priority for the business in FY 2019/20. The strategy will be supported by both an employee council focused on raising awareness globally and fostering a culture of belonging, as well as an external advisory board.

Find out more about our culture and values

Responsibility performance

CREATING TOMORROW’S HERITAGE

Our goals for 2022:

  • Progress: 36% of product with more than one positive attribute

    Goal: to have 100% of product with more than one positive attribute by 2022, where positive attributes relate to social and/or environmental improvements achieved at either raw material sourcing or product manufacturing stage.

    Progress: 68% of cotton procured through the Better Cotton Initiative (BCI)

    Goal: to source 100% of cotton through the BCI, a not-for-profit organisation focused on making global cotton production better for the people who produce it, better for the environment it grows in and better for the sector’s future.

    Progress: 49% of leather sourced from tanneries with environmental, traceability and social certifications

    Goal: to source 100% of leather from certified tanneries by 2022. The significant increase from 1% in FY 2017/18 was achieved by working closely with key tanneries in Italy to improve particularly the traceability of leather.

  • Progress: 43% reduction in market-based emissions since base year FY 2016/17

    Goal: to achieve a zero-carbon footprint in our own operational energy use by reducing absolute emissions, improving energy efficiency and switching to renewable energy sources, before offsetting any remaining emissions.

    Progress: 68% of electricity procured from renewable sources

    Goal: as part of our RE100 membership, we have committed to 100% renewable electricity by 2022 and are driving this through close collaboration with our procurement and retail teams and engagement with landlords.

    Progress: Ended the practice of destroying unsaleable finished products

    Goal: reduce and revalue waste. We already reuse, repair, donate or recycle unsaleable products and we will continue to expand these efforts.

  • Progress: 125,000 people positively impacted in our communities since base year FY 2016/17

    Goal: we aim to positively impact 1 million people by 2022. Progress during FY 2018/19 includes:

    • 65,000 students and teachers engaged in Yorkshire, UK, through school workshops, teacher training, guest speaker sessions and work experience at Burberry.
    • 18,000 people in Tuscany, Italy, benefitting from enhanced multi-cultural spaces and events, new youth mentoring programmes and better access to community support services.
    • 7,000 people in Afghanistan benefitting from training on more sustainable livestock management and participation in community-owned collective action organisations.