Burberry Group plc

Good morning. I'm Kate Ferry, CFO of Burberry, and with me today are Josh Schulman, our CEO, and Joe Kennedy, Head of Investor Relations. As you will have seen, we published our Q1 trading update this morning. There are slides to accompany this call on our corporate website, and a transcript will also be available later today. In terms of running order, I'll go through our performance in the first quarter and then Josh and I will be happy to take your questions. We have continued to make progress with our Burberry Forward strategy this quarter. Comparable retail sales grew 5% versus last year, led by continued strength in Americas and Greater China. We sustained brand momentum through culturally relevant storytelling and activations, driving sales and engagement across key markets. We are cementing our authority in outerwear and scarves with outerwear growing double digits in the quarter, supported by demand for heritage rainwear, lightweight jackets and seasonal products. We are also encouraged by the performance of our silk scarves. At the same time we're extending our product authority into ready to wear and women's bags. Overall and for the first time in three years we saw growth across our women's wear, men's wear, accessories and children's wear divisions. We're seeing a positive customer response to our product and pricing strategy. We are successfully offering value for money in a luxury context across each category with good, better, best pricing tiers. This is supporting our quality of sales through growth in full price and lower markdown year on year. We grew our customer base in the quarter, with Gen Z customers up double digit for the group. We continue to improve store productivity through clienteling and cross-merchandising, supported by the roll-out of category destinations, including 97 polo galleries launched by Father's Day. e-commerce showed good growth up mid-teens in the quarter and finally we have increased half one fy27 wholesale guidance reflecting the positive response from our partners Moving on to the quarter's retail performance. As mentioned, comparable retail sales grew 5% in the quarter. The contribution from space was a 1% headwind, resulting in retail sales growth of 4% at constant exchange rates. Currency represented a 1% tailwind, with retail revenue landing at £455 million, up 5% at reported exchange rates. Turning now to regional performance. Americas delivered the strongest performance in the quarter, with comparable retail sales growth of 12%. This was supported by local spend and broad-based customer acquisition. Mother's Day was particularly successful for us in Americas, driving customer engagement and growth in our bags business. Greater China grew 9%, supported by local spend and particularly good growth in Gen Z customers. While the operating environment in China remains mixed, our actions are driving out performance. Asia Pacific grew 3% in the quarter. South Korea continued to perform strongly, growing 11% on a more challenging comparative base, with growth supported by both local demand and tourist spend. Meanwhile, Japan declined 2%, impacted by continued weakness in inbound tourism from Chinese visitors. Emir declined 3%, reflecting the ongoing impact of the Middle East conflict and lower tourist spending. Tourism in Europe was impacted by the Middle East conflict. However, despite that, we've seen good trends from American visitors and encouraging full price sales. Excluding the Middle East, the region declined by 1%. Turning now to our strategic progress across brand, product and distribution. On brand, marketing investment is sustaining brand momentum and supporting sales. Our Portraits of an Icon campaign brought new customers to our brand, with a 19% increase in new rainwear customers. Our High Summer campaign featuring the Hunza G swimwear collaboration supported a doubling of swimwear sales in the quarter, and a good sport supported growth in house check bags and polos. In addition to global campaigns, we have continued to celebrate relevant local content with the launch of the first installment of a three-part short documentary series created in partnership with Chinese National Geography. The series showcases brand ambassador Chen Kun exploring China's natural landscapes in Burberry's signature outerwear. and to complement our high summer campaign and swimwear collection, we extended our brand codes through hotel takeovers in Antibes, Bangkok and Athens. In product, we continued to build on our authority in the categories where Burberry has the greatest authenticity. Outerwear grew double digit during the quarter, supported by strong demand for heritage and trans-seasonal products, including summer weight outerwear such as our tropical gabardine range and our short Mayfair trench. We've also been encouraged by the performance of silk scarves in these warmer months. We're extending our momentum across product categories outside of our hero categories, with particularly strong performance in knitwear, polos and swimwear in this quarter. And we're seeing good performance in women's bags overall, driven by growth across several families, including the Cotswolds, the Housecheck and Horseshoe. In distribution, we continue to make choiceful adjustments to our store network, including investing in a new location on Via Monte Napoleone in Milan, which is set to open in FY28. The rollout of our category destinations remains on track, supporting store productivity and cross-category merchandising opportunities. We launched 97 polo galleries by Father's Day and will launch trench destinations and cashmere shops in the second half of the year. Finally, we continued the rollout of a clienteling tool. This tool enables a more intuitive and user-friendly experience for our client advisors, while also allowing improved planning and productivity in store and a more engaging customer experience at scale. Turning now to the outlook. As we look ahead, we are encouraged by the progress of Burberry Forward and will build on it to drive performance and deliver sustainable long-term value. In the full year, we expect to make further progress on our financial ambitions, including delivering revenue growth and margin expansion, in line with expectations. We remain mindful of the uncertain geopolitical and macroeconomic environment and its potential impact on consumer confidence. To help you with modelling, in FY27 retail space is expected to be broadly stable. As I noted at the start of the call, wholesale revenue is expected to grow by a high single digit percentage in the first half of FY27, an increase from the mid single digit expected at the start of the year. Annualised cost savings are expected to reach £100 million of which £80 million were delivered in FY26. We expect restructuring charges of around £5 million and capital expenditure of approximately £120 million. Based on the 26th of June spot rates, currency is expected to provide a circa 20 million tail winter revenue and have broadly neutral impact to adjusted operating profit. We continue to expect an adjusted effective tax rate of between 27 and 30%. As we move through the year, we remain confident that we can build on the progress we have made in quality of sales, continue to improve performance and drive sustainable long-term value. And with that, we will now be happy to take your questions.

If you would like to ask a question, you may do so by pressing star followed by one on your telephone keypad now. If you would like to withdraw your question, please press star followed by two. When preparing to ask a question, please ensure your phone is unmuted locally. To confirm that, star followed by one to ask the question. First question comes from Anne-Laure Bismuth with HSBC. Your line is open, please go ahead. Anne-Laure Bismuth with HSBC. Your line is open, please go ahead.

Anne-Laure Bismuth with HSBC. Your line is open, please go ahead. Good morning. I have two questions, please. The first one is on the sales by nationality. So can we go back to the performance by client cluster and share a bit more colors on the growth by nationality, particularly for the Chinese cluster and the evolution between onshore and offshore versus Q4? And my second question is about the retail like-for-like performance for the rest of the year. So as you mentioned, you expect to deliver a new growth in line with consensus, which is consensus at plus 5% for the full year. but implying roughly the same growth for the rest of the year. But the basis of comparison is getting tougher through the rest of the year. So what gives you confidence you can continue to deliver a solid performance through the rest of the year? What are the elements in terms of product category, full price sales that is supporting that outlook? Thank you very much.