Performance Overview - In Q1 FY26, Burberry's retail same-store sales declined by 1% year-over-year, an improvement from the previous quarter's decline of 6%[9] - Retail sales in the Americas and EMEIA regions increased by 4% and 1% year-over-year, respectively, while Greater China and Asia-Pacific saw declines of 4% and 5%[9] Strategic Initiatives - The company closed 4 stores in Q1 FY26, resulting in a 1% year-over-year decrease in store space, aimed at enhancing overall channel quality and productivity[10] - Burberry expects to save approximately £80 million in operating expenses (OPEX) throughout the year due to strict cost control measures[10] Product and Pricing Strategy - The Autumn 25 collection has outperformed expectations, achieving the highest sell-out rate in three years, significantly boosting brand recovery[11] - Burberry is implementing a "Good-Better-Best" pricing strategy to cater to diverse consumer tiers, which is expected to increase the average unit retail (AUR) and overall customer spending[12] Marketing and Consumer Engagement - The company has a clear annual marketing strategy, with expenditures expected to remain at a high single-digit percentage of revenue, focusing on enhancing brand appeal among different consumer groups[13] - Increased marketing efforts targeting Generation Z consumers in China are planned, especially around key festivals to boost brand attractiveness[13] Risks and Challenges - Potential risks include weak macroeconomic consumption, underperformance of brand transformation efforts, and significant contraction in wholesale channels[14]

Core Viewpoint - The company is undergoing a channel adjustment phase, with expectations for high-quality development, maintaining a "buy" rating despite short-term revenue pressure due to store closures [1] Group 1: Financial Performance - In Q1 2025, the company reported revenue of 1.67 billion yuan, a year-on-year decrease of 7.6%, with net profit attributable to shareholders at 120 million yuan, down 22.0% [1] - The company has adjusted its profit forecasts for 2025-2027, now expecting net profits of 340 million, 420 million, and 470 million yuan respectively, down from previous estimates of 660 million and 750 million yuan [1] - The current price-to-earnings ratio is projected at 23.5, 19.4, and 17.1 times for 2025-2027 [1] Group 2: Brand Performance - Revenue from women's wear, men's wear, and children's wear decreased by 12.8%, 6.7%, and 6.6% respectively in Q1 2025, primarily due to store closures by franchisees [2] - The total number of stores has decreased, with net closures of 27 for women's wear, 23 for men's wear, 7 for leisure wear, and 10 for children's wear, bringing totals to 1,225, 1,267, 283, and 468 stores respectively [2] Group 3: Channel Performance - Online revenue in Q1 2025 was 450 million yuan, down 12.7%, while offline revenue was 1.20 billion yuan, down 6.7% [3] - Directly operated stores outperformed franchise stores, with direct sales generating 820 million yuan (down 3.6%) compared to franchise sales of 380 million yuan (down 12.7%) [3] - The company has closed a total of 57 stores this year, with 23 direct and 34 franchise closures [3] Group 4: Profitability and Operational Efficiency - The gross margin improved to 60.0% in Q1 2025, an increase of 4.8 percentage points year-on-year, driven by product structure optimization and improved terminal discount rates [4] - The operating expense ratio increased to 51.4%, with sales, management, financial, and R&D expense ratios rising by 4.8, 0.7, 0.3, and 0.1 percentage points respectively [4] - The company reported a negative operating cash flow of -300 million yuan, primarily due to declining revenue and accelerated payments to suppliers [4] Group 5: Market Sentiment - In the last 90 days, 9 institutions have rated the stock, with 7 "buy" ratings and 2 "hold" ratings, and the average target price set at 16.86 yuan [5]