Overview

Business Summary

Burberry is a British luxury fashion house that has successfully created a niche for itself
as a leading brand in the global market.

• Main Historical Events:

 1856: The brand was founded by 21-year-old Thomas Burberry in Basingstoke,
England.

 1879: The invention of the lightweight, tearproof, weatherproof Gabardine. Patented

in 1888

 1909: Burberry opens the first Paris store at 8 Boulevard Malesherbes.

 1994: Burberry expands into China.
 2002: Listed on London Stock Exchange (IPO).
• Logo Significance:
 Features an equestrian knight horse with the brand name in all caps letters. The
Latin word “Prorsum” signifies luxury, craftsmanship, heritage, and British identity.

• Product: Apparel, accessories, and beauty.

• Business Model: Source quality materials, design, make, and sell through channels.

• Strategy: Build on the strong platform of the brand to increase revenue.

• Comparable Selection: Prada, Moncler, Hugo Boss, and Ralph Lauren based on
industry, geography and revenue generation.
 Key Management

Dr Gerry Murphy - Chair Jonathan Akeroyd - CEO Kate Ferry - CFO

Appointed in 2018. The Irish national has Joined the team in 2022. Jonathan, a British Appointed in mid-2023, Kate is British. An
substantial international experience in national and former Versace CEO has expert experienced financial professional in private
managing business transformation. Gerry knowledge in product elevation and strategic and public companies within the retail and
provides the board with valuable leadership. global expansion. luxury sector. She has been a part of several
IPOs.

Other skilled human resources include non-executive directors experienced in accounting, tax, technology, marketing, and finance-related activities. In general, the Burberry team
comprises the best creative minds of about 120 nationalities to drive the business toward customer satisfaction, profitability, and acceleration.
 Product Profile c
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Revenue Distribution by Product Products: The portfolio includes apparel, accessories, fragrances, eyewear and cosmetics. The
Children's, beauty
and other apparel is a mix of famous trench coats, jackets, premium ready-to-wear dresses etc. Accessories
8% Accessories offer leather goods and shawls. The fragrances and cosmetics are branded perfumes and makeup
37% collections.
Men's
26%
Target Audience: Burberry’s target audience is diverse ranging from Men, women, Parents, and
Children but primarily focuses on individuals who appreciate luxury, and fashion and have a high
disposable income.

Revenue Distribution Analysis:

The accessories category particularly leather goods accounts for 37% which is the majority of the
Women's company's revenue. While women’s and men’s groups are equally major contributors with a joint
29% contribution of 55%. The children and beauty segment has contributed less than 10%.

Global Revenue (in million GBP)

Revenue Trend Analysis:
1,125 The revenue trend from 2015 to 2023 is somewhat volatile. It is assumed to be caused by aging
1,033 1,046 1,017 stores and products, stiff competition, and macroeconomic factors. Burberry's accessories collection
1,013
948 868
892 902 867 continued to attract customers as it recorded a steady increase in volume year on year with the
807
841
792 808 837
796 784 exceptions of 2019 through 2021, in response to the pandemic. Women and men classes are
743 729 668
698 715 relatively stable in volume whilst the children and beauty contributed very little, and nothing post-
624 647 653
pandemic to the revenue realized from the product portfolio.
557 548

Revenue Outlook:
With the new management’s focus on taking leather goods up the market and driving revenue
185 203 184 84 177 184
117 120 127 144 growth, recent evidence has shown an increment in revenue with strategies in place to boost growth
78 91 108
6 0 0 0 0 to record highs in the coming years.
2015 2016 2017 2018 2019 2020 2021 2022 2023

Accessories Women's Men's Children's, beauty and other* Beauty*

Product Geographical Presence
Burberry’s product line is luxurious with a strong history. What differs Burberry Burberry operates in over 50 countries worldwide through its network of retail stores,
from its comparable companies is its unique pattern and trench coat, which is very online platform, wholesale partnerships, giving it a strong geographical presence.
recognisable. Burberry sources the finest materials available to create their Burberry’s strongest market is situated in China, boasting 30% of the company’s revenue.
prestigious products, with an aim to reach 100% certified materials of the highest From 2023(Q1) year on year sales growth in Japan rose 39% and south Korea edged up 6%.
quality by FY29/30. In FY 22/23, 31% of their cotton was certified organic, and In Europe, sales increased by 17% due to healthy tourism flows from the Middle East,
96% of leather was also from certified tanneries. Americas and Asian destinations (Excluding China).

Burberry makes their products out of owned sites in the UK and Italy, as well as via UK remains a challenging location for Burberry due to the lack of VAT-free shopping for
a network of global suppliers. Products are then sold through directly operated and tourists. US is also a weak spot with sales dropping by 8%, compared with a 7% drop in
franchised stores, as well as online. For some products such as eyewear and beauty, 2022Q4. However, this is likely temporary due to the company investing heavily in that
Burberry collaborates with partners to take advantage of their product and market. Beyond Burberry’s global headquarters, they have corporate offices in Shanghai,
distribution capabilities. Seoul, Hong Kong S.A.R., China Paris, Dubai, Milan Barcelona, New York, Ginza and
Leeds.

Burberry Revenue Share By Region 2023 Stores And Concessions

Americas
EMEIA
24% 250
24% 8
23
200

Number of Stores
150 96

27
United Kingdom 100
8% 18 0
15
33 9
China 50 107
22% 51 61
Asia Pacific Ex
Other/Licensing 0
China Asia Pacific EMEIA Americas
20% 2%
Stores Concessions Outlets Franchise Stores
 Financial Profile
Profitability Ratio Analysis Revenue Analysis Balance Sheet Analysis
Revenue by Channel

Same Store Sales Growth %

Overview Du Pont Analysis

Using financial data from reports publishes on Eikon & Felix, Burberry faced significant financial challenges
between 2020-2023. In FY 2020 ROE decreased by 12.1%. Then in FY 2021, store sales growth declined by -9%
and the operating margin fell by 8.9%. However, FY 2022 did see some recovery with revenue increasing by 21%
and operating profits by 3 times due to cost control measures, displaying a V-shaped rebound and generating
healthy dividends.

In FY 2022, Revenue increased by almost 10% following a strong 4 th quarter as China lifted COVID-19 sanctions The Du Pont Analysis displays Burberry’s increase in profitability over the last four years,
(Annual Report 2022-2023). Although Burberry experienced a stagnation in growth during FY 2023, its profitability with ROE increasing by from 23.8% in 2019 to 32.1% in 2023, an 8.3% increase which
metrics remain strong when compared to competitors (Eikon, 2024). Nevertheless, the dramatic slowdown in retail places Burberry’s ROE 11.9% greater than the industry median in FY 2023.
sales shows evidence that Burberry's current model has reached its peak and new synergies for growth must be
explored. Due to covid, Burberry’s profits and asset turnover decreased heavily, making FY 2020
particularly negative. Since FY 2020, recovery has been driven by improved net profit
margins and sustainable debt levels. Although, asset turnover has been slow to return to
pre-covid levels, suggesting inefficiencies in Burberry’s asset utilisation.
 Financial Profile
Capital Structure
Debt / Equity Analysis Overview

Burberry’s aim is to reinvest business generated cash and maintain good credit ratings, as observed in the
annual reports. The graph shows that prior to the pandemic, Burberry operated with a low debt/equity ratio,
this was no longer feasible due to Covid which worsened Burberry’s financial position. Low debt is clearly
favourable in the industry as Mckinsey & Company (2020) stated that the leaders of the luxury fashion
industry operate with more efficient fixed assets, and less debt.

Debt Structure:
 Bonds – £300 mil, matures Sept 2025
 Loans –£300 mil

Between 2021-22, Burberry reduced its net debt, with the capital structure putting more weight on equity
rather than debt. However, due to tough market conditions in 2023 Burberry saw a slight increase in debt.
Likely due to rising base rates among major markets, increasing the cost of debt and Burberry’s WACC.

Liquidity

Burberry can cover both short-term and

long-term debt obligations better than
the luxury industry median, as well as
shorter time to receive inventory
payments.
 Financial Profile
Payout Policy
Payout Ratios Overview
Burberry’s payout ratio has improved over the past three years and have introduced their Dividend Reinvestment
Plan (DRIP), using dividends to buy further shares. The latest payout ratio was 50%, with a dividend of 44.5p per
ordinary share. In 2021, the dividend per share of 42.5 was declared, almost 3.5 times higher than in 2020, showing
recovery in profits. The 63% payout ratio in 2021 also evidences Burberry’s target to achieve a high-dividend policy.

Burberry also conducted share buybacks in both 2021(40,468,000 shares) and 2022 (39,670,000 shares), which
temporarily increased earnings per share. These buybacks helped maintain shareholder confidence during the dip in
company performance in 2022 and 2023, despite improved profitability in 2023.

Analyst’s Comments
Analysts predict the revenues to be constant for the next few years and profits to squeeze due to extensive spending
on the marketing programs (Felix and Yahoo). Regarding the market consensus, most analysts vote to hold onto
Burberry, reflecting that the next steps the company take will drastically affect the markets outlook on the company.
 Ownership Structure
Institutional Investors Burberry’s Executives Public Companies and Individual Investors

39.6% 1.3% 59.1%

Institutional Shareholders

Name Country Equities Percentage Dated by

Institutional Shareholders
Lindsell Train Ltd. UK 21,928,267 6.116% 01.04.24 BlackRock Advisors (UK) Ltd.

Massachusetts Financial Services Co. USA 20,668,065 5.764% 01.04.24 MFS International (UK) Ltd.
BlackRock Investment Management (UK)
Schroder Investment Management Ltd. UK 17,996,512 5.019% 01.04.24 Ltd.
Norges Bank Investment Management
BlackRock Fund Advisors USA 17,246,821 4.810% 31.12.23
The Vanguard Group, Inc.

Baillie Gifford & Co.

Baillie. Gifford & Co. UK 13,934,881 3.887% 01.03.24 BlackRock Fund Advisors

The Vanguard Group, Inc. USA 12,660,000 3.531% 01.03.24 Schroder Investment Management Ltd.

Massachusetts Financial Services Co.

Norges Bank Investment Management Norway 11,984,922 3.343% 13.01.22
Lindsell Train Ltd.

BlackRock Investment Management (UK)

Ltd. UK 10,065,566 2.807% 01.03.24
MFS International (UK) Ltd. UK 8,050,840 2.251% 01.03.24
BlackRock Advisors (UK) Ltd. UK 6,555,000 1.828% 01.03.24 Source: London Stock Exchange Group
 Share Price Performance
Burberry’s stock price is reflective of both the brand’s strategic initiatives and Furthermore, the brand’s recognition in the Dow Jones Sustainability Index
broader economic influences. From its IPO in 2002, the stock experienced a seems to correlate with a stable price performance, reflecting investor
period of steady growth possibly due to the brand’s expansion. When the confidence in corporate responsibility. In 2020, the global pandemic hit
Financial Crisis of 2008-2009 hit, the global stock market experienced a causing the share price to decline. In 2022, Jonathan Akeroyd was appointed
major descent and BRBY was one of many who took a hit. However, under as the new CEO and it seemed to have restored investors’ confidence as the
Angela Ahrendt’s management, the brand shifted towards a retail-led share experienced a surge in price up until June 2023. The following decline
distribution model, and the share price managed to climb back with a robust in price could be attributed to the fact that Burberry reported an operating
appreciation in share value asserting the strategy’s success. The transition in profit of,1396 million GBP whereas the estimated was 3,108 million GBP. The
leadership to Christopher Bailey a renowned fashion designer marked a company struggled to meet that year’s objectives and that was reflected in
period of continued growth with increased volatility suggesting market the chart. The latest correction appears to indicate market caution as
sensitivity to executive changes and strategic direction. This period saw investors assess the long-term viability of Burberry’s current strategic path.
Burberry pioneering in digital innovation which may have contributed to the In summary, Burberry’s stock and trajectory reveal a brand capable of
stock’s resilience during retail sector fluctuations. navigating shifts in leadership and market sentiment.
 Comparative Analysis with Peers
The chart below compares Burberry’s percentage growth with that of On the other hand, Prada’s and Moncler’s IPO seem to have taken
its peers- Ralph Lauren(RL), Hugo Boss(BOSS), Prada(1913), and place in 2011 and 2015 respectively, almost a decade later than its
Moncler(MONC), over a span of two decades. competitors. Both stocks seem to be presenting slower growth
patterns with less volatility, especially Prada, compared to their peers.
Against its competitors, Burberry’s performance, reflecting a 476.68%
growth, has been both commendable and indicative of its unique Noteworthy, is also the fact that during 2016 when BRBY was under
market positioning. While it trails the growth percentages of BOSS and Bailey’s leadership and was recognized as the industry leader in
RL, it maintains a clear lead over 1913(Prada) and MONC indicating a sustainability, the stock entered a rally and outperformed all of its
middle-ground position in market performance. The disparities can be peers by a significant amount until the pandemic hit and then every
attributed to different strategic initiatives, geographical market focuses, stock experienced a decline. RL appears to be taking the lead in
and management. RL, BRBY, and HUGO show an extraordinary recent times showcasing a great recovery since the pandemic. Across
rebound post-2009 likely due to successful brand expansion and the board, Burberry’s comparative performance showcases a
successful management. balanced growth profile within the luxury sector.
 Industry Segment and Recent Developments
BRAND COMPETITOR DATA

Burberry has made considerable progress in elevating its brand beyond domestic to international space. The data shows where it stand in comparison to competitors in brand assortment and pricing in the
UK market reviewed in 2022. Within high-end luxury brand collections, leather goods constitute one of the largest portions, Burberry having increased its share representing 20% of the overall allotment.
Accessories make up 39% more prominent than that of Louis Vuitton, Gucci, and Prada. 2022 UK market reviews, shows Burberry’s leather good pricing sits close to competitors, reasonably lower at the
low and high end than that of the other leading brands.

Market Trends Major Challenges

Sustainability and ESG: Customers are demanding more sustainable items Inflation: Growing cost of materials and production

Second-hand Market: Increasing interest driven by affordability Supply Chain Disruptions: Brought by Covid 19 and Russian-Ukraine war

Digitalization: Advancing into digital currency and metaverse fashion Geopolitical Disorders: The impact of the ongoing conflict and its effect on business
activities.
Awards Partnerships

Environmental and Social Responsibility

The Burberry group collaborates with key stakeholders, industry peers, and businesses to effect positive lasting change and practices responsible craftsmanship, nature protection in production,
and ethical trading. Empower the young and encourage increased diverse representation across its value chain as part of corporate social responsibility.
 SWOT Analysis
Strengths: Weaknesses/Mitigants:

 Global Presence: Operates in over 50 countries with more than 400 stores worldwide.  High Prices: The premium prices challenge can be handled through strategic
collaborations and effective targeting.
 Strong Brand Recognition: A famous and trusted fashion brand that has existed for about 168
years with several endorsements thus making it reliable.  Imitations: The counterfeit problem can be reduced by creating a strong global
presence and awareness.
 Diversified Product Portfolio: From apparel, accessories, and fragrances for men, women, and
children caters to a vast range of customers.  Dependence on China and UK Markets: Market expansion can prevent the risk
associated with the over-dependence.
 Technological Innovation: Uses digital technology and e-commerce to create a great shopping
experience.  Demographical Limitation: This can be lessened through diversifying product
lines.
 Focus on Product and Environmental Sustainability: Innovative lasting products with
timeless designs and the company’s commitment to reducing carbon emissions.  Limited Diversity in Product Lines: Further diversification of its offerings to
create a variety.

Opportunities: Threats/Mitigants:

 Expanding into Emerging Markets: Such as Southeast Asia and South America where  Stiff Competition: This can be combated through market expansion and effective
demand is rising. collaborations.
 Digital Transformation: In a digitally evolving world, continued investment in digital  Economic Uncertainty: Market expansion and effective product diversification can
initiatives and e-commerce, artificial intelligence, and data analytics should be sustained. help reduce the systematic impact of Instabilities.
 Diversification of Product Lines: Beyond apparel and accessories to increase customer base.  Substitution Threat: This can be handled by creating a diversified portfolio of
products.
 Expansion of Distribution Channels: Explore new distribution channels to increase access to
products.  Regulatory Changes: Mitigated through strategic alliances.
 More collaboration with Other Brands: To create new products and make existing products  Supply Chain Delays: Mitigated through industry collaborations.
affordable to a wider group.
 Valuations

Circular Model

• Sales (Revenue): Burberry’s market growth is expected to reach 3.25% for the next 5-6 years. It is suggested that it will rise to 5.5% until 203 due to increase in disposable income and the booming

IT industry. Due to a slowdown in demand for luxury goods, a recession and then recovery, there will be negative growth for Burberry in 2024.

• Operating Costs of %age of Revenues: Several sources say inflation will fall in coming years due to decrease in demand causing operating costs to fall.

• Depreciation as %age of PPE: More investment is expected in PPE with wear and tear in Burberry’s old equipment. Newer equipment will have less depreciation charge (around 22%-25%).

• Tax: Likely to remain stable.

• Operating Current Assets to Revenue: Revenue expected to grow, pushing down the ratio. Burberry’s policy to hold cash will neutralize the impact on ratio. By 2026, the ratio will be 24%-25%.

• Capex as %age of Sales: Sales will rise and Burberry will expand support business activities. Likely to increase to 6.5% by 2025.

• Other Long Term Assets as %age of Sales: Expected to increase in long run. Neutralizing effect will leave it at 16%.

• Operating Current Liabilities as &age of Operating Costs: Operating costs will fall due to inflation falling and economies of scale, causing . This ratio will rise, to 36% by 2030.

• Other NCL as %age of Sales: NCL will be stable but sales will rise, causing ratio to reach 5% gradually.

• Long Term Debt Amount: Burberry’s growth means debt will increase, staying within 1,350 and 1,450.
 DCF

Purpose Concept Benefits Applications

• Estimates the • Considers the • Provides a • Company
present value of "time value of single value to Valuation
an investment's money" represent the • Stock Valuation
future cash • Discounts investment's • Project
flows. future cash worth Valuation
flows back to • Helps asses • Provides a
present-day potential clearer picture
value profitability of future worth

• Valuation method is to analyze transaction comparables for similar synergy values, and use industry reports.
• Burberry’s forecast is predicted to be 4%-5% synergy on revenue for the next coming years.
• The DCF Valuation was calculated within a range of 39.6 and 46.51
• Burberry: optimistic future but is in the outliers
• Burberry’s high depreciation in right-of-use assets (around 65% of total depreciation) negatively impacts free cash flows, leading to inflated share price
in analysis.
 Comparable Selection
Companies Selected
Selection Criteria:
• Companies Hugo Boss, Prada, Moncler, and Ralph Lauren were
chosen according to growth percentage, profitability, location,
market capitalization and revenue.

Moncler:
• In a similar market situation as Burberry, with a market cap 4x
lower than Burberry.
• Falling revenue with an optimistic future outlook similar to
Burberry.

Hugo Boss:
• Similar market cap to Burberry.
• Optimistic future outlook based on analyst and market
Market Cap (in billion GBP) conditions.
Ralph Lauren:
• Market cap realistic compared to Burberry.
• Growth trends similar to Burberry, with slowdown in 2023, and
optimistic figures for 2025 onwards.
Prada:
• Market cap realistic compared to Burberry.
• Growth trends similar to Burberry, with slowdown in 2023, and
optimistic figures for 2025 onwards.
 Football Field

• Football field a metaphor to represent company’s

Length of bars represent the range of values that each valuation method provides
valuation range.
• Comparing bar length shows how much valuation varies
depending on method used.
• Overlapping bars indicate methods that agree with
company’s worth.
• Position of the stock price relative to the valuation range
can be visualized on the football field.
• DCF identified due to difficulty in estimating a specific
factor relevant to industry.
• Wider range for non-outlier methods is due to uncertain
Excluding outliers, the valuation falls between £11 and £30 per share.
business performance since 2021.
 Potential Buyers
The potential buyers of Burberry are mainly strategic buyers and financial investors. Strategic buyers have been sub-grouped into apparel and accessories, beauty, and luxury hotel buyers.
A recent survey by Deloitte on the global fashion and luxury market investors showed the largest part of the strategic synergistic buyers belonged to apparel & accessories, hotels, and other
luxury sectors with a combined 72% thus the basis for this analysis.

Strategic Buyers
Categories Company Rationale Potential Gain
LVMH Maintain and increase market share within the industry Growth
Kerring Reduce overall cost of running the business Increased Profit

Tapestry Incorporated (Coach) Elevate position in the market and reduce competition

Moncler Profit from the existing widely spread distribution channels

Apparel and Accessories Prada
Cosmetics, Fragrances and Chanel Capitalize on the current product mix to increase offering Expansion
Jewelries L'Oreal Diversification
Luxury Hotel Hilton Group Leverage the existing strong brand identity Diversification

The above-proposed competitor buyers can leverage Burberry’s existing product profile, customer base, and distributive channels to expand their business, cut the cost of establishing new
stores, increase business profit from reaching a wider audience, and grow their market share. The Hilton group with industry synergy (luxury) can diversify from hotels only and capitalize
on the brand's strong brand identity and existing human capital to expand its offering.
 Interloper Analysis
Company
Key Metrics (GBP) Revenue by Business Revenue by Geography Comments
Name
LVMH Market Cap (m) 341,879 Japan
7% Perfumes and Beverages
• Very large business with a profit after tax of £13,638.48m (31/12/2023)
Cosmetics compared to Burberry’s £492m (01/04/2023). LVMH offers a very strong
France 8%
EV (m) 366,614 8%
Asia (exclud-
10% financial presence that would benefit Burberry’s innovation and other
ing Japan)
Other Coun- 31% Fashion and projects that create new revenue streams.
EBITDA (m) 28.75 tries
Leather Goods
12% Watches and
Europe Jewelry
49% • Due to the size of LVMH, it is more resistant to economic downturns
EBITDA Margin 33.24% (excluding 13% Selective which is one of Burberry’s weaknesses.
France) United States Retailing
16%
EV/EBITDA 14.31
25% 21% • LVMH is also extremely diverse with its product lines and revenue by
geography which would greatly benefit Burberry’s business.

Kering Market Cap (m) 35,960

Bottega Corporate Rest of the world Japan
• Kering is a suitable buyer for Burberry due to its expertise in the luxury
Veneta 8% 7% 7% goods sector. Kering, like LVMH is also large enough to acquire Burberry
EV (m) 47,854 8% and fund its current innovations and ventures.

EBITDA (m) 5,596 Yves Saint Asia Pacific • Kering is a French multinational company with control over a range of
Laurent
16%
Gucci Group
50% (Blackstone, 2021)
North Amer-
ica
35%
French and Italian designers. With these expertise, Kering can effectively
EBITDA Margin 33.5% 23% boot Burberry’s profits and product line, whilst reducing management
Other Houses costs and other supply side issues due to the use of Kering’s distribution
Western Eu-
EV/EBITDA 8.85 18% rope channels.
28%

Tapestry Market Cap (m) 7,467

Stuart Weitzman Japan
• Burberry is dependent on Chinese and European markets for their
revenue, making them vulnerable to shocks in these markets. Coach
(Coach) EV (m) 7,689
4%
Greater china
9%
would be a suitable buyer as it offers geographical diversification as 60%
Kate Spade 15% of its revenue is from the United States market.
21%
EBITDA (m) 1,110
Other
United States • Burberry has an EV of £4917m with an additional £1,124.8m synergy
60% value, making the total purchase price being an estimated £6,041.8m,
EBITDA Margin 20.24% 16%
Coach which is a large investment for Tapestry. Alternative routes such as
75%
EV/EBITDA 6.78 affiliations or partnerships may be more suitable.

• Coach also has a strong online presence which is highly beneficial for
Burberry, boosting revenue from E-commerce.
 Financial Buyers
The financial buyer is open to investing in different kinds of businesses and industries rather than only those that align with his existing operations.
Value of Funds Manged Potential Investment
Company Name Similar Aquations Comments
(mm) Appetite

► LMVH (2016) ► Etro (2021)  LMVH, has been facilitated by Catterton (forming L Catterton in
2016) and thus resulting in the largest, diversified consumer-
$34,000 ► Ganni (2017) ► A.P.C (2023) dedicated private equity firm in the world. Allowing LMVH to
inorganically grow and expand their luxury product range, the same
could be done for Burberry.
► Birkenstock ► Respodia
 Huge M&A appetite with 35 deals made in 2023 alone.
(2021) (2017)  Potential synergistic benefits as that of a strategic merger and
therefore best of both worlds.
 A British firm with who is highly invested in the apparel market
► Hugo Boss ► Dr Martens
 Founder-friendly, minority-growth investors who leverage our sector
(2014)
knowledge and global reach to unlock growth
► Valentino  Synergies to be unlocked via product-centric approach with a track
► Gruppo
$82,000 ► Golden Goose Florence
record of success in technology and digital ecosystems, propelling
Burberry’s online marketplace presence.
(Blackstone,
(2020) 2021) (2023)  Lack of experience with many luxury fashion brands apart from
Valentino
 Previous history of struggling to raise capital during M&A lulls
delaying proceedings.

► Stuart Weitzman ► Lane Bryant  Some great past niche luxury fashion house aquations and exits
 No longer seems to deal with high end houses with a focus on
higher street apparel clothing ventures
$10,000 ► Jones NY ► Kurt Geiger
 Smallest fund with a lack finalities to really propel Burberry in
e-commerce or licensing
► LOFT/Ann Taylor
 Abandoned a bid for Ted Baker in 2022

► SPANX, Inc (Blackstone, 2021)  Experienced with accelerating high-end fashion companies such as
Gianni Versace.
$139,000 ► GIVI Holding SPA and Gianni Versace  Already has a record amount of unsold assets, “cannot return
SPA, 20% Stake (Blackstone, 2014) capital overnight” so unlikely to offer an ideal an amount for
Burberry (Financial Times , 2024)
Key Takeaway And Recommendations
Several measures could be taken to prevent the negative consequences of M&A transactions.

Strong leadership and Detailed Due Diligence: Post-Merger Integration Flexibility and Adaptability:
communication: Effective leadership Conducting thorough due Plan: Creating a detailed The challenges that M&A encounters
and communication are critical diligence prior to acquisition integration plan is critical in transactions are often unexpected, and
throughout the M&A process, from due is critical. This includes to successfully integrating the it takes adaptability to be successful. Ma
diligence to post-merger assessing the market situation, unde acquired business into intaining flexibility in the integration
integration. Managers rstanding the operations and the buyer's operations. This plan process and
must communicate transparently with financial performance of the target should outline being ready to adapt strategies and
employees, customers and other company, and identifying potential clear goals, timelines, and plans when necessary, can
stakeholders, provide clear direction and risks and challenges. responsibilities for various help reduce risks and overcome
manage expectations during the transiti integration activities, including obstacles
on period. organisational restructuring,
systems integration, and cultural
alignment.
 Strategic Alternatives

Strategic alternatives refer to different courses of action that a company can consider to achieve its goals and meet challenges.
Some of Burberry strategic alternatives includes Market Collaboration, Affiliations, Joint Ventures, Partnerships, These choices can help
Burberry expand its market, improve brand and support various social and environmental causes.

• Over the years, Burberry has collaborated with various brands and artists to create unique and innovative products, expand its
customer base and enhance the brand image. Some examples of their marketing collaborations include partnerships Supreme
and Snapchat.

• The collaboration often results in the creation of limited edition or exclusive products that are only available through the
partnership. Shoppers will benefit from unique merchandise that reflects the combined creativity of the collaborating brands.

• In addition, Burberry entered joint ventures and partnerships to expand its business and enter new markets. Burberry has formed
partnership with various technology companies such as Apple and Google to explore new ways to connect with customers through
digital platforms and services.

• Partnerships with technology companies can lead to innovative shopping experiences, such as virtual try-on tools or personalized
recommendations, that improve the overall customer journey and satisfaction.

• Burberry also partnered with Chinese e-commerce company Tmall in 2014 to increase its online sales in China 2017. In
2016, Burberry entered a partnership with a luxury fashion e commerce platform. Yoox Net-a-Porter is improving its digital
capabilities and improving its customer experience.

• Burberry has also partnered with several charities, such as the Burberry Foundation, which supports initiatives in the fields of
education, culture and community development.
In general, The collaborations, partnerships , Burberry's joint ventures and partnerships have helped the company expand
its market, improve brand image and support various social and environmental causes.
Considerations and Alternatives

Alternatives
The board may consider collaborating and partnering (joint venture) with some strategic competitors like LVMH to explore
operating and financial synergies that would minimize cost and maximize profit. Another consideration could be a
Management Buy Out with capital from large private equity firms, this way the brand can benefit financially, and retain its
management, heritage, and most importantly identity having existed for nearly 2 centuries.
Timeline and Summary of Recommendations
Final: Cultural alignment.
Finalize contracts and inform
stakeholders.

Mid: Thorough analysis of

previous and similar acquisitions,
due diligence on company
financials, and compliance
Initial: Business and management. Complete
valuation of the company.
regulatory review. Initial meeting
with stakeholders and qualified Purchase price and deal
potential buyers. negotiation with buyer.

Recommendations
Appendix

Circular Model
Appendix

Alternative DCF
Appendix

Alternative DCF
Appendix

Comparables Valuation
Appendix

Transaction Comparables
Appendix

LBO
Appendix

LBO
Appendix

LBO
Appendix

Football Field
Appendix

Football Field
Appendix

Football Field
 Appendix

Meeting Minutes

Date Meeting Duration Agenda

Discussing the choice of the company (Burberry), evaluating

03/04/2024 Strategy Meeting 2 Hours
strategic and financial implications

Management and Product Detailed findings on background, operations and management of

10/04/2024 1.5 Hours
Profile Meeting Burberry

Comparative Analysis Conducting detailed analysis of competitors, including SWOT

15/05/2024 1 Hour
Meeting Analysis

Financial Analysis Conducting detailed financial analysis of Burberry, including revenue

20/05/2024 2 Hours
Meeting projections and cost synergies

Financial Analysis Conducting detailed financial analysis of Burberry, including

25/04/2024 1.5 hours
Meeting valuation methods and comparable analysis

Making the final compilation of data based on all previous

30/04/2024 Final Meeting 1.5 hours
discussions and analyses
 References

Chen, X., Cheng, S., Shu, R., & Yang, Y. (2021, September). Digital Marketing Transition for
Luxury Industry Under the New Coronavirus Epidemic-The Case of Burberry. In 2021
International Conference on Financial Management and Economic Transition (FMET 2021) (pp.
248-254). Atlantis Press.

Pardal, M. A. (2021). Equity Valuation of Burberry Group Plc (Master's thesis, Universidade
Catolica Portuguesa (Portugal)).

Santos, J. B. M. G. D. O. (2022). Equity valuation: Burberry Group PLC (Doctoral dissertation).

Xie, J., & Youn, C. (2020). How the luxury fashion brand adjust to deal with the COVID-
19. International Journal of Costume and Fashion, 20(2), 50-60.