Agreement

RNS Number : 3467B

Burberry Group PLC

03 April 2017

 

3 April 2017  

Burberry Group plc

Burberry announces strategic partnership with Coty for its Beauty business

Burberry announces a strategic partnership with Coty to accelerate the growth and development of its Beauty business.  The exclusive licensing agreement will take effect from October 2017, subject to regulatory approvals. 

This follows the successful repositioning and elevation of the Burberry Beauty business over the last four years of direct operation.  During this time, Burberry has launched award-winning luxury fragrances such as My Burberry and Mr Burberry, redeveloped and relaunched make-up, and boosted sales of new fragrances in key markets.

Leveraging the strengths of each partner, Burberry will lead on creative elements of the Beauty business, while benefitting from Coty's deep beauty industry expertise and first-class global distribution.

Christopher Bailey, Chief Creative and Chief Executive Officer of Burberry Group plc, commented:

"We are delighted to partner with Coty, a world leader in luxury fragrance and make-up.  Working with a global partner of their scale and expertise will help drive the next phase of Burberry Beauty's development and position this business for future growth.  Further, the combination of the upfront payments and ongoing royalties is financially attractive and is expected to provide an accretive impact to our earnings from FY 2018/19."

Camillo Pane, Chief Executive Officer of Coty Inc., commented:

"We are proud to welcome Burberry as a strategic partner of Coty.  We look forward to growing further Burberry's luxury beauty products using Coty's world-class expertise in developing and bringing to market beauty brands."

The information communicated herein is inside information.

Financial information:

·     In the second half of FY 2017/18, Burberry expects to receive cash payments of £130m for the long-term exclusive global licence and related transfer of the Beauty business, and c.£50m for assets transferring (which is subject to inventory adjustments) totalling c.£180m

·     Burberry will also receive ongoing royalty payments from October 2017

·     Burberry currently expects this agreement to be broadly neutral to adjusted profit before tax* in the transition year (FY 2017/18) and accretive from FY 2018/19

·     As part of this agreement c.£50m of gross assets will transfer to Coty, subject to inventory adjustments

·     The cash proceeds received will be used for general corporate purposes

·     Burberry currently expects c.£30m of one-off cash costs associated with this agreement 

·     In FY 2015/16 retail/wholesale Beauty revenue was £203m, the majority of which was wholesale

·     All of the above is subject to final regulatory approval and based on currently available information

*Adjusting items are defined in note 2 to the financial statements contained in the Annual Report 2015/16.

Enquiries

Investors and analysts
Charlotte Cowley	VP, Investor Relations	020 3367 3524

Media
Andrew Roberts	VP, Corporate Relations	020 3367 3764
Caroline Daniel Paul Raeburn	Brunswick	020 7404 5959

About Coty Inc.

·    Coty Inc. is one of the world's largest beauty companies with approximately $9 billion in revenue

·    Coty's strong entrepreneurial heritage has created an iconic portfolio of leading beauty brands

·    Part of the S&P 500, Coty is a global leader in fragrance, professional salon hair colour & styling and colour cosmetics

·    Coty's Luxury division is focused on prestige fragrances and skincare with brands such as Calvin Klein, Marc Jacobs, Hugo Boss, Gucci and philosophy

·    Coty was founded in 1904

·    Visit www.coty.com for further information

About Burberry

·    Established in 1856, Burberry is a global British luxury brand with a heritage of innovation, craftsmanship and design

·    The Burberry business comprises 5 divisions: mens, womens, childrens, accessories and beauty

·    Burberry is headquartered in London and listed on the London Stock Exchange. Burberry is a constituent of the FTSE 100 index (BRBY.L)

·    Visit www.burberry.com for further information

Certain statements made in this announcement are forward-looking statements.  Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from any expected future results in forward-looking statements.  Burberry Group plc undertakes no obligation to update these forward-looking statements and will not publicly release any revisions it may make to these forward-looking statements that may result from events or circumstances arising after the date of this document.  Nothing in this announcement should be construed as a profit forecast.  All persons, wherever located, should consult any additional disclosures that Burberry Group plc may make in any regulatory announcements or documents which it publishes.  All persons, wherever located, should take note of these disclosures.  This announcement does not constitute an invitation to underwrite, subscribe for or otherwise acquire or dispose of any Burberry Group plc shares, in the UK, or in the US, or under the US Securities Act 1933 or in any other jurisdiction.

BURBERRY, the Equestrian Knight Device and the Burberry Check are trademarks belonging to Burberry which are registered and enforced worldwide.

 

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