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.

• New CEO and CFO outlined the 'Burberry Forward' strategy to reignite brand desire, restore growth, and drive long-term value creation by returning to core strengths in outerwear and British heritage.

• Immediate actions included new marketing campaigns, leadership changes, cost savings, and inventory management to stabilize the business.

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

• Free cash flow was negative at £184m, and the company is acting urgently to stabilize operations and restore profitability.

Financial highlights

• Revenue for H1 FY25 was £1,086m, down 20% at CER and 22% reported compared to H1 FY24.

• Comparable retail sales fell 20% in H1; adjusted operating loss was £41m, including £33m in impairments and £29m in inventory provisions.

• Adjusted operating margin fell to -3.8% (from 15.9% prior year); gross margin declined 640bps to 63.4%.

• Adjusted diluted EPS was -18.3p (vs. 42.1p prior year); net finance charge increased to £27m.

• Free cash outflow was £184m (vs. £15m outflow last year); net debt/EBITDA rose to 2.4x.

Outlook and guidance

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

• Cost savings of £40m annualized targeted, with £25m to be delivered in FY25; £8m realized in H1.

• Capex planned at £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.

• Restructuring charges of £20m expected in FY25, with £12m incurred in H1.