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CREDIT SUISSE - 15TH ASIAN INVESTMENT CONFERENCE21 MARCH 2011
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STACEY CARTWRIGHTEVP, CHIEF FINANCIAL OFFICER
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• AUTHENTIC BRITISH HERITAGE– Rooted in integrity of outerwear
• BROAD CONSUMER APPEAL– Across genders and generations
• GLOBAL REACH
• DIVERSIFIED BUSINESS MODEL– By channel– By region– By product
• STRONG BRAND MOMENTUM DRIVEN BY DIGITAL INITIATIVES
• UNDERPINNED BY OPERATIONAL EFFICIENCIES
BURBERRY
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FINANCIAL HIGHLIGHTS
• RECORD RESULTS IN FULL YEAR TO MARCH 2011– Revenue of £1.5bn, up 27%– Adjusted PBT of £298m, up 39%– Adjusted retail/wholesale EBIT margin of 15.6%
• MOMENTUM CONTINUES IN NINE MONTHS TO DECEMBER 2011– Revenue up 26%– Mindful of challenging macro environment
• STRONG FINANCIAL POSITION– c.£300m cash at March 2011– Continue to invest to drive growth– 40% dividend payout ratio
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2007 2008 2009 2010 2011
* FY 2010 re-presented to exclude the discontinued Spanish operations
2011
STRONG GROWTH IN REVENUE AND OPERATING PROFIT
ADJUSTED OPERATING PROFIT £M
2007 2008 2009
1,501+27%
850+14%
995+17%
301+37%
185+12%
206+11%
YEAR TO MARCHYEAR TO MARCH
REVENUE £M
181(12%)
1,202+21%
1,280+7%
220 +22%
1,185*
2010
+77%+63%
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LICENSING:
JAPAN7%
BALANCED BY CHANNEL
GLOBAL/OTHER3%
FY 2006/07 REVENUE
RETAIL: 48%
LICENSING: 7% GROWTH
JAPAN4%
RETAIL: 67%35% GROWTH
9M 2011/12 REVENUE
GLOBAL2%
WHOLESALE: 42%WHOLESALE: 27%
11% GROWTH
Growth is year-on-year for nine months
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BALANCED BY REGION
EUROPE: 50%
AMERICAS: 26%
ASIA PACIFIC: 22%
REST OF WORLD: 2%
FY 2006/07 RETAIL/WHOLESALE REVENUE
EUROPE: 33%
AMERICAS: 25%
ASIA PACIFIC: 36%
REST OF WORLD: 6%
9M 2011/12 RETAIL/WHOLESALE REVENUE
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BALANCED BY PRODUCT
WOMENSWEAR: 40%
MENSWEAR: 30% NON-APPAREL: 28%
CHILDRENS: 2%
FY 2006/07 RETAIL/WHOLESALE REVENUE
WOMENSWEAR: 33%
MENSWEAR: 24%NON-APPAREL: 39%
CHILDRENS: 4%
H1 2011/12 RETAIL/WHOLESALE REVENUE
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PURSUING OPERATIONAL EXCELLENCE
INVESTING IN UNDER-PENETRATED MARKETS
LEVERAGING THE FRANCHISE
INTENSIFYING NON-APPAREL DEVELOPMENT
ACCELERATING RETAIL-LED GROWTH
GROWTH DRIVEN BY KEY STRATEGIC INITIATIVES
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PURSUING OPERATIONAL EXCELLENCEBUILD INFRASTRUCTURE TO SUPPORT GROWTH
• ALL MAJOR MARKETS NOW LIVE ON SAP– US and SE Asia went live FY 2010– Korea and Brazil went live FY 2011– Middle East and China went live FY 2012– Benefits of global implementation will be delivered
over coming years
• MONTHLY PRODUCT FLOW – Synchronisation across all channels and functions
• REPLENISHMENT– Now about half of mainline revenue
• SUPPLY CHAIN AND LOGISTICS– Progress on refining and optimising operating
model
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LEVERAGING THE FRANCHISEONE COMPANY, ONE BRAND
• OUTERWEAR– More than half of apparel sales– Reinforcing heritage and leadership– Accelerating innovation– Reduces fashion risk
• BURBERRY BESPOKE– Digital platform to personalise trench coat– Over 12 million options– Average dwell time on site of 18 minutes
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LEVERAGING THE FRANCHISEENGAGE THE LUXURY CONSUMER
• DIGITAL CRITICAL FOR REACH – Especially for younger luxury consumer
• INNOVATION IN DIGITAL SPACE– Social media: over 11m Facebook fans– ‘Tweetwalk’ of runway shows– Relaunched burberry.com with engaging
content
• INNOVATIVE LAUNCH OF BURBERRY BODY FRAGRANCE– Multi-million pound marketing campaign– Samples offered exclusively via Facebook– TV ad campaign premiered on YouTube– High profile outdoor advertising
TWEETWALK
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BURBERRY BODYSYNCHRONISATION ACROSS ALL CHANNELS
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INTENSIFYING NON-APPAREL DEVELOPMENTINNOVATE TO BUILD ON MOMENTUM
• NON-APPAREL 40% OF REVENUE IN FY 2011
• INNOVATION IN SOFT ACCESSORIES
• CONTINUED OPPORTUNITY IN SHOES– Strengthening offer throughout pyramid
• MENS ACCESSORIES– Male-dominated Emerging Markets
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ACCELERATING RETAIL-LED GROWTHFOCUS INVESTMENT IN FLAGSHIP MARKETS
• FY 2012 CAPEX ACCELERATES TO £180-200M; RETAIL-LED– Enabled by strong brand momentum and
improved store productivity
• FOCUSED IN FLAGSHIP MARKETS– Top 25 markets account for c.60% of
mainline sales– Flagship/cluster strategy– 25% IRR hurdle rate
FAUBOURG ST HONORÉ, PARIS
REGENT STREET, LONDON
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SÃO PAULO
TEL AVIV
INVESTING IN UNDER-PENETRATED MARKETS EVOLVING THE MODEL
• EMERGING MARKETS 19% OF SALES (2008: 6%)*
• ENTER NEW MARKETS WITH FRANCHISEES
• TAKE DIRECT CONTROL AT APPROPRIATE STAGE
• INCREASE INVESTMENT IN – Stores– Infrastructure– Retail disciplines– Marketing– Social media
* Emerging Markets includes China, India, Russia, Eastern Europe, Latin America and the Middle East
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WELL-POSITIONED FOR LONG-TERM GROWTH
• BY CHANNEL– Retail expansion: c.13-14% new space in H2– Selective wholesale growth: US department
stores and Asia travel retail– Digital commerce
• BY REGION– Drive growth in core regions; especially flagship
markets– Emerging Markets growth and evolution
• BY PRODUCT– Non-apparel– Womenswear– Menswear– Childrenswear
• EARLY BENEFITS FROM STRATEGIC INVESTMENTS– Supply chain– Systems, planning and replenishment– Marketing
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PASCAL PERRIERPRESIDENT, ASIA PACIFIC
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BURBERRY IN ASIA PACIFICA FAST GROWING BUSINESS
% numbers are growth at constant FX
£168m
£189m 17%
£240m 17%
£283m 13%
£457m 53%
YEAR TO MARCH
ASIA PACIFIC RETAIL / WHOLESALE REVENUE
£265m 52%
+172%
• BURBERRY’S LARGEST REGION BY REVENUE– Japan excluded as mainly royalties from licence
partners
• APPROXIMATELY 200 STORES AND CONCESSIONS EX JAPAN
• 2,800 EMPLOYEES IN 12 COUNTRIES
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BURBERRY IN ASIA PACIFICLEVERAGING THE FRANCHISE
• HISTORICALLY, A FEDERATION OF SIX INDEPENDENT BUSINESSES– SE Asia acquired 2001– Hong Kong acquired 2001– Korea acquired 2002– Taiwan acquired 2005– China acquired 2010– Japan largely under licence
• MOVED FROM COUNTRY-DRIVEN TO REGIONAL STRUCTURE– COO– Planning and merchandising– Marketing– Finance– HR– Client services– Local management teams
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BURBERRY IN ASIA PACIFICLEVERAGING THE FRANCHISE
• REGIONAL PLANNING AND MERCHANDISING– Three years ago, <1% common styles – Today, 75% commonality across region
• REGIONAL HUB AND INVENTORY– Down from seven DCs to one regional hub and
one satellite DC in China– Moved to regional from country specific inventory
• SAP-ENABLED– 2009: Hong Kong, Australia– 2010: Korea, Taiwan, South East Asia– 2011: China
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BURBERRY IN ASIA PACIFICACCELERATING RETAIL-LED GROWTH
• FOCUS ON FLAGSHIP MARKETS– Flagship / cluster strategy– High demographic markets– Travelling luxury consumer
• FLAGSHIP STORES OPTIMISE BRAND PRESENCE– 25% IRR hurdle rate– Ion Orchard, Singapore (6,500 sq feet)– George Street, Sydney (6,400 sq feet)– Sparkle Roll, Beijing (11,000 sq feet) TAIPEI 101
GEORGE STREET, SYDNEY
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BURBERRY IN ASIA PACIFICACCELERATING RETAIL-LED GROWTH
• FLAGSHIP/CLUSTER STRAGEGY IN HONG KONG– Total of 19 directly-operated stores– First flagship opened on Canton Road
(5,000 sq feet)– Complemented by investment in mainline stores,
childrenswear, standalones, concessions and travel retail
– Pacific Place flagship to open later in 2012 (17,000 sq feet)
CANTON ROAD, HONG KONG
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CHINAWHAT WE ACQUIRED
• ACQUISITION OF RETAIL OPERATIONS– 50 stores for £65m– Completed in September 2010– 15% economic interest held by existing
franchisee– Concentrated in 30 provincial capitals
Flagship city Provincial city Other city
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CHINASTRATEGIC RATIONALE
• ATTRACTIVE LUXURY MARKET– Growth market– Wealth generation– 69m outbound trips and increasing
• IN LINE WITH STRATEGY– Leveraging the franchise – Accelerating retail-led growth – Investing in under-penetrated markets
• ATTRACTIVE TO BURBERRY– Male-dominated luxury market– Outerwear– Non-apparel and gifting– Childrens– Young luxury consumer
30%
20%
25%
CHINESE LUXURY GOODS GROWTH
CHINA GDP
SOURCE: IMF, BAIN & COMPANY, MCKINSEY
0
2,000
4,000
6,000
8,000
10,000
2000 2005 2010 2015F
0%
2%
4%
6%
8%
10%
12%
14%
China GDP US$bn (lhs) China GDP as % of world
35%
18%
35%
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CHINARAPID AND SMOOTH INTEGRATION
• CONFIDENCE IN INTEGRATING ACQUISITION DUE TO– Proven model of moving from franchise to
directly-owned operations globally– Expertise in integration of Asia Pacific region– Ability to deploy global initiatives quickly
• BUILT A STRONG TEAM AHEAD OF ACQUISITION– New MD – Over 100 person infrastructure– Opened offices in Shanghai and Beijing
• KEY STRATEGIES GOING FORWARDS– Drive retail productivity– Evolve the store network– Invest aggressively in the brand
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CHINADRIVE RETAIL PRODUCTIVITY
• ELEVATE MERCHANDISE ASSORTMENT
• INTRODUCE EFFECTIVE PLANNING – Replenishment programme so never out of stock– Monthly flow to bring newness
• GLOBAL SALES AND SERVICE PROGRAMME– Implementation of Burberry Experience
• SAP IMPLEMENTED– Live in November 2011
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CHINAEVOLVE STORE NETWORK
• SELECTIVE STORE EXPANSION– Add new stores– Renovate, expand and relocate existing stores– Partner with luxury developers– Open alongside peers
• POTENTIAL FOR 100 STORES– Flagship/cluster strategy
SPARKLE ROLL, BEIJING
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CHINAAGGRESSIVELY INVEST IN BRAND
• UTILISE GLOBAL MARKETING STRATEGIES
• LEVERAGE BRAND ATTRIBUTES– Britishness– Heritage and authenticity– Outerwear and large leather goods– Icons
• CONNECT WITH CONSUMER– Traditional channels– Social media– Digital platform
• SERVE THE TRAVELLING CHINESE CUSTOMER
SINA WEIBO
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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.
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IR CONTACTS
Kim Warren
Investor Relations Associate
Fay Dodds
Director of Investor Relations
Charlotte Cowley (on maternity leave)
Investor Relations Manager
Adam Wright
Investor Relations Manager
Horseferry House
Horseferry Road
London
SW1P 2AW
Tel: +44 (0)20 3367 3524
www.burberryplc.com
www.burberry.com
www.artofthetrench.com
www.facebook.com/burberry
www.twitter.com/burberry
www.youtube.com/burberry
https://plus.google.com/burberry