Burberry announces revenue of £2.5bn and adjusted PBT of £421m;
details ambitious three year plan to drive revenue growth, improve productivity and deliver at least £100m of cost savings as challenging external environment continues
Initiatives identified to deliver enhanced revenue growth and improved productivity
- Strong brand with significant opportunities by channel, product and region
- Plan to outperform sector growth over time
- Revenue initiatives focus on key products, retail productivity and e-commerce
- In-depth review of ways of working results in plan to reduce complexity and simplify processes to enable future growth
- Programme to deliver annualised cost savings of at least £100m by FY 2019
FY 2016 performance
- Revenue £2.5bn, down 1% underlying
- Comparable sales down 1%; up 3% excluding Hong Kong and Macau
- Adjusted profit before tax down £35m to £421m, down 10% underlying
- Licensing profit down £19m, as planned, as Japanese licences expire
- Reported profit before tax £416m (2015: £445m)
- Net cash up £108m to £660m
Further operational progress in FY 2016
- Tight management of discretionary costs saved over £25m against plan
- Move to one label and runway show evolution
- Digital innovation: new social media collaborations, single pool of inventory
- Product innovation: Scarf Bar, runway rucksacks, Mr Burberry fragrance
- Good progress in Japan transformation; retail revenue doubled
- Store openings in flagship cities including New York, Seoul and Tokyo
Enhanced capital returns to shareholders
- Full year dividend 37p, up 5%; payout ratio reaches target of around 50%
- Progressive dividend policy; FY 2017 dividend at least in line with FY 2016
- Share buyback of up to £150m starting in FY 2017
Christopher Bailey, Chief Creative and Chief Executive Officer, commented:
"While we expect the challenging environment for the luxury sector to continue in the near term, we are firmly committed to making the changes needed to drive Burberry's future outperformance, underpinned by strong brand and business fundamentals.
We continue to see significant opportunities ahead of us and have put ambitious plans in place to increase future revenue, enhance productivity and create a more efficient organisation. In addition, the capital allocation framework announced today prioritises the investment needs of the business and regular dividend payments to our shareholders, while balancing capital efficiency and flexibility."
