1Q17 RESULTS

Burberry reported fiscal 1Q17 retail revenue of £423 million, flat versus the year-ago period. The company did not disclose growth in wholesale revenue or total revenue. Retail comparable sales were down 3%, driven by weak performance in Hong Kong and Macau. Comps were up in the Asia-Pacific region, excluding Hong Kong and Macau. Tourist spending has slowed in Japan, Continental Europe and the Americas, but the negative comps were offset in part by growth from domestic customers in Japan and all major European markets. The company reported mid-single-digit comp growth in the UK. Digital sales grew strongly in all regions, driven by mobile channels, which account for almost 60% of the traffic to the company’s site. Digital sales were supported by further expansion of the single pool of inventory model; this now covers about 90 stores worldwide, improving stock availability for all online markets. “In this context, we continue to focus on managing our business with agility whilst implementing the ambitious evolution of our strategies and ways of working we outlined in May, to position Burberry for long-term growth,” CEO and Chief Creative Officer Christopher Bailey said. “These plans are now well under way and on track to deliver our financial goals.” On July 11, Burberry announced that Bailey will take on the new role of President and Chief Creative Officer. He will be overseeing all elements of brand and design, working in partnership with the newly appointed CEO, Marco Gobbetti.

GUIDANCE

For FY17, the company expects new space to contribute low-single-digit percentage growth to total retail revenue, and it plans 15 mainline store openings, with a similar number of closures. The wholesale channel is projected to decline by more than 10%, reflecting tight inventory control in the US by wholesale customers. Total licensing revenue is projected to decline by £20 million, due to expiring licenses in Japan. If exchange rates remain at current levels, FY17 reported, adjusted retail/wholesale profit will benefit by about £90 million compared to FY16 rates. As of June 30, Burberry had 214 retail stores, 213 concessions, 60 outlets and 58 franchise stores globally.