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Burberry's revenue recovers in mixed global performance

Growth in the Americas was a standout, but travel restrictions hit other markets
November 11, 2021
  • Revenue back to pre-pandemic levels
  • £150m share buyback will complete in the second half

Burberry (BRBY) posted double-digit growth in key markets and revenue reached pre-pandemic levels in its half-year results. The luxury fashion group reinstated the half-year dividend and announced the resumption of its share buyback programme. Despite retail comparable store sales rising 37 per cent against the FY2021 interim and 18 per cent on the FY2020 comparative, the market wasn’t impressed, with shares down 5 per cent on results day.   

The group justified the share buyback move with reference to its below-target net debt/adjusted Ebitda position – £150m of shares will be bought in the second half of this fiscal year.

Burberry’s Americas market took a larger slice of the revenue pie. Revenue was up 92 per cent from last year, driven by an almost doubling of full-price sales and success in attracting “new and younger customers”. The Asia Pacific region remains the group’s main revenue driver, with sales in mainland China and South Korea up by 30 and 40 per cent respectively against FY2020.

However, the group struggled with the impact of pandemic restrictions. In EMEIA, Burberry’s second-largest market by revenue which usually records around half of annual sales from tourists, store sales were down by a third due to lack of footfall. South Asia Pacific sales “fell materially”, with an average of 14 per cent of stores closed in the period.

Consensus forecasts from FactSet give adjusted earnings per share of 85p and 98p for FY2022 and FY2023, respectively, up from 67p for FY2021. Free cash flow was at £104m against the comparative’s £45m outflow. Hold.

Last IC view: Hold, 1,924p, 13 May 2021

BURBERRY (BRBY)   
ORD PRICE:1,846pMARKET VALUE:£7.48bn
TOUCH:1,846-1,848p12-MONTH HIGH:2,267pLOW: 1,463p
DIVIDEND YIELD:0.6%PE RATIO:16
NET ASSET VALUE:379pNET DEBT:15%
Half-year to 25 SepTurnover (£bn)Pre-tax (£m)Earnings per share (p)Dividend per share (p)
20200.8872.812.2nil
20211.2119135.811.6
% change+38+162+193-
Ex-div:16 Dec   
Payment:28 Jan