Preliminary results for the 52 weeks ended 28 March 2020
Strong progress against strategy, well prepared to navigate through COVID.
“Prior to Covid-19, we were delivering strong momentum across our brand and product, with sales ahead of our expectations. Since then, the global health emergency has had a profound impact on the world, our industry and Burberry but I am very proud of the way we have responded. We have taken swift action to mitigate the financial impact on our business, while prioritising the safety and wellbeing of our teams and customers. We have a strong balance sheet and liquidity, with space for investment when markets recover. We have found new ways to strengthen our connection with consumers, drawing on our digital leadership. We have also mobilised our resources in support of the relief efforts. It will take time to heal but we are encouraged by our strong rebound in some parts of Asia and are well-prepared to navigate through this period. Now, more than ever, our strategy to secure our position in luxury fashion is key. I would like to thank our teams for their dedication and leadership during these challenging times.”
Marco Gobbetti, Chief Executive Officer
In the current year, we have adopted new accounting standard IFRS 16, recognising operating leases as right of use assets and lease liabilities on the balance sheet the impact of which is set out on page 21. Throughout this review, to aid comparability, a pro forma FY 2020 (see detail on page 47) has been included to be comparable with FY 2019 results.
|28 March 2020||30 March 2019||% change reported FX||28 March 2020 pro forma||% change pro forma vs March 2019 reported FX||CER*|
|Retail comparable store sales*||(3%)||2%|
|Adjusted operating profit*||433||438||(1)||404||(8)||(8)|
|Adjusted operating profit margin*||16.4%||16.1%||15.3%|
|Reported operating profit||189||437||(57)||160||(63)|
|Reported operated profit margin||7.2%||16.1%||6.1%|
|Adjusted Diluted EPS (pence)*||78.7||82.1||(4)||77.9||(5)||(5)|
|Diluted EPS (pence)||29.8||81.7||(64)||29.0||(65)|
|Free cash flow*||66||301||66|
- Strong momentum in brand, product and sales delivered before the COVID-19 outbreak, ahead of our previous expectations
- Double digit growth in followers and engagement on social platforms year on year, including through the crisis
- Comparable sales -27% in Q4 with around 60% retail stores closed at end of March. This compares to +4% for the first 9 months of the year
- Adjusting items of £245m predominantly due to store impairments and stock provisions relating to COVID resulting from its expected impact on future cashflows generated by these assets
- Year to date sales in Mainland China and Korea already ahead of the prior year and continuing to show an improving trend
- Responded rapidly to COVID-19 with a comprehensive cost mitigation programme tailored to several outcome scenarios whilst prioritising the safety and wellbeing of our people
- Retooled our factory in Yorkshire to make gowns and sourced surgical masks through our global supply chain. To date donated >150,000 pieces of PPE to NHS and care charities, funded research into a vaccine developed by the University of Oxford and donated to charities tackling food poverty in the UK
- Existing cost saving programme delivered cumulative savings of £125m this year and programme accelerated to deliver cumulative savings of £140m by FY 2021
- Strong balance sheet with cash of £887m including £300m from a drawdown of the RCF in March 2020 and actions in place to protect liquidity
- Capital allocation framework retained. However, given current uncertainty, a final dividend has not been declared, with future dividend payments to be reviewed at end of FY 2021
FY 2021 outlook***
We are not in a position to provide specific guidance for FY21 at this stage as it is currently challenging to predict the course of the pandemic and the longer lasting economic consequences. However, we currently have 50% of our store network closed and we expect our first quarter (to end June 2020) to be severely impacted with store closures likely to be at or near peak for most of the quarter. We are leveraging our digital platforms to forge stronger connections with our customers and have mitigation plans to conserve cash and reduce operating costs, whilst retaining flexibility to respond rapidly and optimise revenues in markets as they start to recover.
***Full outlook on page 6 of the full announcement
All metrics and commentary in the Group Financial Highlights and Business and Financial Review exclude adjusting items unless stated otherwise.
The following alternative performance measures are presented in this announcement: CER, Pro forma FY 2020 results, adjusted profit measures, comparable sales, free cash flow, cash conversion and lease-adjusted net debt in the prior period. The definition of these alternative performance measures are in the Appendix on page 13.
Cumulative cost savings are savings compared to FY 2016 operating expenses. The savings relating to the store rationalisation programme are measured compared to the reported costs, which were under IAS 17.
Certain financial data within this announcement have been rounded.