Burberry(BURBY) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for the fiscal year was £2.3 billion, down 10% year-on-year, with a strong recovery in the second half [57] - Adjusted operating profit was £396 million, a decline of 8%, with a margin improvement to 16.9% [57][68] - Free cash flow increased significantly to £349 million, and the company reinstated a full-year dividend at 2019 levels [58][81] Business Line Data and Key Metrics Changes - Full price sales rose 12% on a two-year comparative basis, indicating strong performance despite markdown reductions [59][62] - Leather goods and outerwear saw double-digit growth in full price sales, contributing to improved average unit retail (AUR) [16][23] - The company successfully reduced markdown volumes, which had a 3% headwind on Q4 comparable sales growth [59] Market Data and Key Metrics Changes - In the Americas, comparable sales grew by 15%, with full price growth reaching 43% [63] - Asia Pacific experienced a 17% growth, with full price sales up 21%, particularly strong in China and Korea [64] - EMEA faced a 44% decline in the fourth quarter due to store closures and reduced tourist travel [65] Company Strategy and Development Direction - The company aims to accelerate growth in the next phase by leveraging its brand to create significant value and focusing on high-quality full price sales [27][28] - Key priorities include building brand advocacy, focusing on core categories, enhancing store performance, and supercharging digital sales [32][40] - The company plans to maintain a strong focus on sustainability and community engagement as part of its growth strategy [29][49] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the brand's repositioning and the strong momentum in full price sales, despite the challenges posed by COVID-19 [22][92] - The company anticipates high single-digit revenue growth from the fiscal '20 base and meaningful margin accretion in the medium term [50][91] - Management highlighted the importance of maintaining operational efficiency and cost control while investing in growth initiatives [48][89] Other Important Information - The company achieved a carbon-neutral footprint across all operations by the end of the year [26] - Significant progress was made in diversity and inclusion, recognized in various indices [26] - The company plans to open 55 new stores in fiscal year '22, primarily in the Asia Pacific region [42] Q&A Session Summary Question: Markdown activity and its future - Management confirmed that markdowns will be phased out from mainline stores over the next couple of years, with significant progress already made [96][97] Question: Profile of new customers - The company is attracting a broad spectrum of new customers, particularly in Asia and the U.S., with strong performance in leather goods and outerwear [99][100] Question: Margin expectations - Management confirmed an ambition for medium-term margins to exceed 20%, driven by gross margin strength and cost control [104][106]