Burberry Group (BRBY) H1 2025 earnings summary

Executive summary

• Leadership acknowledged challenging market conditions and underperformance due to inconsistent brand execution and lack of focus on core categories and customers, launching the 'Burberry Forward' strategy to refocus on outerwear, heritage, and luxury appeal.

• New CEO and CFO outlined immediate actions including inventory reduction, cost control, disciplined capital allocation, new marketing campaigns, and leadership changes to stabilize the business and rebuild profitability.

• The company aims to return to £3 billion annual revenue, rebuild margins, and drive strong cash generation over time.

• Adjusted operating loss reached £41m, with a margin of -3.8%, impacted by £33m impairment and £29m inventory provision charges.

• Free cash outflow was £184m, with adjusted diluted EPS at -18.3p.

Financial highlights

• H1 FY25 revenue was £1,086m, down 20% at CER and 22% reported year-over-year.

• Gross margin declined to 63.4%, down 640bps year-over-year, impacted by higher product costs and inventory actions.

• Adjusted operating loss was £41m, including £33m in impairments and £29m in inventory provisions; excluding these, adjusted operating profit was £21m.

• Net debt at period end was £1,414m including lease liabilities; net debt to Adjusted EBITDA at 2.4x.

• Attributable loss was £74m, versus a profit of £158m in H1 FY24.

Outlook and guidance

• Wholesale revenue expected to decline by about 35% in FY25; retail space broadly stable.

• Cost savings of £40m annualized targeted, with £25m to be delivered in FY25; restructuring charge of £20m in FY25, with £12m incurred in H1.

• Capex guidance for FY25 is £150m; dividend payments suspended for FY25 to preserve balance sheet strength.

• Currency headwinds expected to impact revenue by £70m and adjusted operating profit by £20m.

• Retail sales expected to remain broadly flat in FY25.