Preliminary Results Part 1

Great Universal Stores PLC
5 June 2001

PART 1

                                                                   5 June 2001

                      The Great Universal Stores P.L.C.

                           PRELIMINARY RESULTS FOR

                           YEAR ENDED 31 MARCH 2001



The Great Universal Stores P.L.C. (GUS), the retail and business services
group, today announces its preliminary results for the year ended 31 March
2001.

Highlights


  * Profit before amortisation of goodwill, exceptional items and taxation:
    £487m (2000: £448m)

  * Earnings per share before amortisation of goodwill and exceptional
    items: 37.2p (2000: 34.5p)

  * Final dividend up 3% to 14.8p, making 21.0p for the year (2000: 20.6p)

  * Experian: record profit of £217m despite US economic slowdown; continued
    strong growth from Experian International

  * Argos Retail Group: underlying profit at Argos up by over 20%; Home
    Shopping up 8%; cost savings on track

  * Reality: good progress in improving efficiency and increasing third
    party business

  * Burberry: profits more than trebled; taking greater control of
    Asia-Pacific in 2002; preparation on track for partial Initial Public
    Offering within twelve months, subject to market conditions





Sir Victor Blank, Chairman, commented:

'To effect significant change in a business, while at the same time improving
performance, is a real challenge. This has been achieved by the GUS team over
the past year. We have demonstrated good operational performance whilst
establishing strategic focus and strengthening the management team. This gives
me confidence in our ability to create further shareholder value in the years
ahead.'

John Peace, Group Chief Executive, added:

'The year under review saw good progress in pursuing our strategic objectives,
while generating profit growth and cash. Although we remain uncertain about
the impact on Experian North America of a slowing US economy, our intention
for the current year is to continue this progress, while significantly
increasing investment in the business to drive future growth.'

Enquiries

GUS      John Peace           Chief Executive               020 7495 0070
         David Tyler          Finance Director
         Fay Dodds            Investor Relations

Finsbury Rupert Younger                                     020 7251 3801
         Rollo Head



There will be a presentation today to analysts and institutions at 9.30am at
the Ground Floor Conference Centre, UBS Warburg, 1 Finsbury Avenue, EC2M 2PP.

The announcement is available on the GUS web site: www.gusplc.com. The slide
pack and presentation to analysts and institutions will also be available
there later in the day.

The next detailed comment on current trading will be the First Quarter Trading
Update at the AGM on 25 July 2001.

GROUP RESULTS

In the year ended 31 March 2001, Group sales grew by 7% to over £6bn. Profit
before amortisation of goodwill, exceptional items and taxation was £486.8m,
compared to £447.9m last year. This represents growth of 9%, with all of our
main businesses showing advances in profit year on year.

The Group's effective tax rate (based on profit before amortisation of
goodwill and loss on sale of businesses) was 23.5%, compared to last year's
22.8%. Earnings per share before amortisation of goodwill and exceptional
items grew by 8% to 37.2p (34.5p last year).

The Group generated £338m of cash in the year after acquisitions, disposals
and dividends (2000: £109m). This reduced year-end borrowings to £1.7bn (£
1.1bn excluding securitised loans).

The Board has proposed a final dividend of 14.8p (2000: 14.4p), giving 21.0p
for the year (20.6p last year). Dividend cover is 1.8 times, based on EPS of
37.2p.


                                           Sales £m    Profit before taxation £m
12 months to 31 March                       2001  2000         2001         2000
Experian                                   1,018   949        216.6        200.6
Argos Retail Group                         4,250 4,016        212.1        188.7
Reality                                      476   444          5.1          2.8
Burberry                                     425   230         69.5         21.7
Other                                        265   395         57.8         98.1
Inter-divisional turnover                  (393) (375)            -            -
Total                                      6,041 5,658        561.1        511.9
Net interest                                                 (74.3)       (64.0)
Profit before amortisation of goodwill,                       486.8        447.9
exceptional items and taxation
Exceptional items                                            (84.7)         11.1
Amortisation of goodwill                                     (92.3)       (79.4)
Profit before taxation                                        309.8        379.6
                                                              




CHIEF EXECUTIVE'S REVIEW

The year under review has been one of progress for GUS in terms of greater
strategic focus, improved operational performance and strengthened management
teams.

Greater strategic focus

We are now focused on three key inter-related businesses: Experian
(information services), Argos Retail Group (multi-channel retailing) and
Reality (outsourcing), while continuing to invest in our other businesses,
especially Burberry, to maximise shareholder value.

During the last year, we have reshaped our portfolio of businesses to enable
us to drive growth:


  * we created Reality and Argos Retail Group (ARG) in May and June 2000
    respectively;

  * we acquired our Burberry licensee in Spain in June 2000; and jungle.com
    in September 2000;

  * we sold Highway Vehicle Management in August 2000; Universal Versand,
    our Austrian home shopping business, in March 2001; and K.C. Finance, the
    Channel Islands subsidiary of General Guarantee Finance, also in March
    2001; and

  * we are winding down both General Guarantee Finance and our property
    joint venture to release cash.

Improved operational performance

Profit during the year grew by 9% to £486.8m. Argos, Burberry and Experian
International all generated record profits. Despite a further planned
reduction in sales at UK Home Shopping, underlying profitability was up 8%.
Against the background of a slowing US economy, Experian North America held
profits broadly flat in dollar terms. Reality made good progress in its first
ten months of operation. Excluding the Finance and Property divisions, which
are being wound down, profit growth from continuing businesses was 12%.

Investing for the future

We continue to invest across the Group in both existing and new businesses.
Spend on new initiatives charged to profit during the year totalled £29.6m,
comprising £8.0m in launching store and credit cards within ARG Financial
Services, £7.7m in Argos Additions as it was rolled out to all stores, £12.6m
in gusco.com, funding the Group's e-commerce ventures and a £1.3m loss from
jungle.com. This spend represents 6% of Group profits of £487m.

In the year to March 2002, GUS will continue to invest both revenue and
capital for growth. Capital expenditure, which was £268m in 2001, will rise by
about £100m in 2002, with major projects including a supply chain programme at
Argos, a new UK data centre and buildings for Experian, and new stores for
Burberry. Cash will also be invested in the build-up of the debtor book for
the Argos store card and continued credit-related promotions in UK Home
Shopping. Given the run-down of General Guarantee Finance and our property
joint venture, we nevertheless expect the Group to be cash generative during
2002, before acquisitions or disposals.

Strengthened management teams

During the year, we have significantly strengthened management at all levels
across the Group, including a number of senior appointments:


  * Craig Smith joined as CEO at Experian North America in July 2000 and
    John Saunders became CEO of Experian International, the newly combined
    Experian UK and Rest of World;

  * at Argos Retail Group, Kate Swann, who was previously Managing Director
    of Homebase, joined as Managing Director of Argos in January 2001. Trevor
    Hilliard, formerly a main board director of Alliance & Leicester Plc, was
    appointed Managing Director of ARG Financial Services in the same month;
    and

  * Reg Sindall joined from Bass PLC in March 2001 as Group Human Resources
    Director.

Burberry

In November 2000, GUS announced its intention to arrange a partial IPO for
Burberry. It plans, subject to market conditions, for this to take place in
the next twelve months. Progress is being made in preparing the company to
become a separate plc, while still strongly driving forward momentum in the
business.

Change of registered name

A special resolution will be put to shareholders at this year's AGM to change
the name of the company to GUS plc.



EXPERIAN
12 months to 31 March                            Sales*           Operating
                                                                   Profit
                                                 2001     2000    2001    2000
Experian North America £m                         661      617   155.4   144.7
Experian International £m                         357      332    61.2    55.9
Total £m                                        1,018      949   216.6   200.6
Operating margin                                                 21.3%   21.1%


    *     Includes £10m of sales from Experian UK to Group customers not
    previously included in turnover (2000: £9m)

Throughout the world, Experian helps its clients to make better informed
decisions in targeting and acquiring new customers, building successful
customer relationships and managing financial risk. It does this for over
100,000 clients in more than 50 countries, serving a broad array of markets,
such as finance, retail, utilities and automotive.

For Experian as a whole, sales grew by 7% and profits by 8%. At constant
exchange rates and excluding acquisitions and divestments, sales for Experian
grew by 6% and profit by 2%. Exchange rate movements benefited sales by £46m
and profit by £10.8m.



Experian North America
12 months to 31 March                      2001    2000    underlying change *
Sales £m                                    661     617                    +2%
Operating profit

Managed businesses £m                     145.2   137.6                    -2%

FARES/other associates £m                  10.2     7.1                   +36%

Total £m                                  155.4   144.7                    -1%

Operating margin (excluding associates)   22.0%   22.3%

*     at constant exchange rates, excluding divestments

Experian North America's key objectives are to protect and grow its
traditional businesses, to re-engineer processes in order to increase
efficiency and to deliver on strategic growth opportunities.

The year to March 2001 saw progress in all these initiatives against a
background of a weakening US economy, which slowed sharply from November 2000.
While this initially led to many of Experian's clients reassessing, and in
many cases delaying, discretionary spend, sales performance in the second half
of the year (4% underlying growth) improved over the first half, when
underlying sales were flat.

This is because:


  * market demand recovered in some areas, most notably mortgage
    refinancing, prescreen and list rental; and

  * some recent initiatives started to benefit the sales line. Share has
    been regained with major strategic accounts; more Marketing Solutions
    products are being sold to financial services companies and revenue
    streams started from new products such as the automotive database and
    direct-to-consumer credit reports.

Action has also been taken to reduce the cost base, specifically in
non-revenue producing support activities.

Sales were up 2% in the year at constant exchange rates and excluding two
businesses previously put into joint ventures. This does not take into account
the rationalisation of non-strategic product lines, which reduced sales by 2%.
Sales in Information Solutions (about 60% of North American turnover) fell by
2% in the year, with a better performance in the second half (H1 -4%; H2 +1%).
Marketing Solutions delivered 5% sales growth for the year, comparatively
steady between halves (H1 +4%; H2 +6%).

At constant exchange rates, profits fell slightly year-on-year, due to the
sudden slowdown in the US economy in the third quarter and continued
investment in the future of the business. However, lower interest rates led to
a recovery in the mortgage refinancing market, leading to a significantly
higher contribution from FARES, the real estate joint venture. This was offset
in part by a loss of £2.2m by the NuEdge associate.

Looking forward, it is not possible to be certain of the impact on Experian
North America of a slowing US economy. Nonetheless, measurable progress is
being made to capitalise on the opportunities available to this business:


  * the senior management team is being further strengthened. Don Robert was
    appointed President of Information Solutions in April 2001 and is joined
    by a new Chief Technology Strategist, Chief Marketing Officers for
    Information Solutions and Marketing Solutions and a Senior VP for Decision
    Solutions;

  * Exactis, an e-mail distribution company, was acquired in May 2001 for
    $13.5m. This enables Experian to deliver promotions for its direct
    marketing clients for both traditional mail and e-mail campaigns in the US
    and UK;

  * several new products and services have been launched to provide a
    continuing source of future revenue growth. For example, VISA USA expects
    to reduce the number of on-line credit card disputes by up to 50% by using
    e-series, Experian's on-line authentication services. Experian's
    direct-to-consumer initiative opens up a new growth channel providing
    individual consumers with real time credit reports and a broad range of
    tools to understand better their personal credit reports; and

  * in the past six months, five major contracts have been won to provide
    customer relationship management (CRM) services. These include a
    multi-year, multi-million dollar contract with GE Capital, hosting its
    private-label credit card database.

Experian International
12 months to 31 March        2001       2000                 underlying change*
Sales £m
     UK **                    216        187                               +13%
Rest of World                 141        145                               +13%
     Total                    357        332                               +13%
Operating profit £m
     UK                      51.6       48.2                                +7%
Rest of World                 9.6        7.7                               +36%
     Total                   61.2       55.9                               +11%
Operating margin            17.1%      16.8%

*     at constant exchange rates, excluding divestments


**    includes £10m of sales from Experian UK to Group customers not
      previously included in turnover (2000: £9m)

Experian continues to build on its strong market position in the UK and
developing positions in Continental Europe and other markets. Since these
businesses increasingly share the same customers, products and R&D programmes,
they were combined during the year to form Experian International, enabling it
to improve the quality of service to its customers.

All business lines and all principal regions performed strongly. At constant
exchange rates and excluding acquisitions and divestments, sales were up by
13% and profits by 11%.

Significant contract wins during the year include:


  * First National Retail Finance, Time Retail Finance (account processing);


  * EULER Trade Indemnity (information services);

  * Bass, Egg, Northern Rock (database management);

  * Prud'homales, Imagine R, Groupama, Cegetel (France outsourcing); and

  * ConTakt, Family & Friends (Germany account processing).

Together, the value over their life of major contracts won in the last year is
about £200m, with annualised sales of over £25m.

UK

Sales grew by 13% during the year, helped by particularly good performances
from decision support, value-added products and automotive services.

Profit growth of 7% reflects greater investment in the second half of the year
in start-up costs for major contract wins and additional technical resources
to support the rollout of e-series, the web-enabled product suite.



Rest of World

At constant exchange rates and excluding divestments, underlying sales growth
in the Rest of World was also 13%. This excludes the French facilities
management business, which was sold in July 2000 and which generated sales of
£20m last year. Sales growth was driven by strong performances in France and
in European decision support, together with a significant short-term call
centre contract in Italy in the first nine months of the year, which accounted
for growth of 4%.

Underlying profit growth for the year was 36%, boosted by the Italian call
centre contract and a one-off gain of £1.3m following the sale of the French
facilities management business in the first half.

Looking forward, Experian International's future growth will come partly from
more clients taking up recently developed products, including:


  * the e-series products, now live across all product areas and in twelve
    clients;

  * the customer data integration and matching products (called Truvue),
    supporting clients' CRM projects; and

  * its customer account processing system (GEMS), which is a best-of-class
    credit card, retail account and personal loan customer management system.
    This system currently supports Morgan Stanley Dean Witter and Argos and
    will be rolled out to additional clients in the coming year.

Given common management and the extent of shared costs between Experian UK and
Rest of World, it is no longer appropriate to report these businesses
separately. From 1 April 2001, sales for UK and Rest of World will be reported
separately, but profits will be combined.





ARGOS RETAIL GROUP
                                                   Sales       Operating profit
12 months to 31 March                            2001     2000    2001     2000
Argos £m                                        2,387    2,057   160.8    137.4
Home Shopping UK & Ireland £m                   1,540    1,622    25.1    11.8*
Financial Services £m                               -        -     4.5     14.4
Home Shopping Continental Europe £m               322      337    21.7     25.1
Total £m                                        4,250    4,016   212.1    188.7
Operating margin                                                  5.0%     4.7%

*     after £11.5m of redundancy and restructuring costs

Argos Retail Group (ARG) was formed in June 2000, combining the skills and
assets of Argos with GUS Home Shopping operations to create a multi-brand,
multi-channel business. It maintains separate retail brands, each with its own
customer proposition. Support functions are integrated and benefits of scale
are driven by combined buying and merchandising. All ARG retail brands provide
the convenience of home shopping through a multi-channel offer, combining
catalogues and e-commerce, and are focused on broadening customer choice
through the development of new products and services.

Despite significant investment in the year, sales and profits for ARG as a
whole grew by 6%, excluding exceptional costs in 2001 and the £11.5m of
restructuring costs incurred by UK Home Shopping in 2000.

In ARG, e-commerce sales (defined as via the internet or digital TV) were £
78m, compared to £15m in the previous year. Excluding jungle.com's e-commerce
sales, this is four times the level of a year ago. Argos' website, which was
relaunched in September 2000 to include the full product range, is
consistently in the top five most frequently visited retail sites and was
number one in December 2000. 7% of sales by Wehkamp, the Dutch home shopping
business, were ordered over the internet during the year, with 10% in the
final quarter.



Argos
12 months to 31 March                         2001         2000          change
Sales £m                                     2,387        2,057            +16%
Operating profit £m                          160.8        137.4            +17%
Operating margin                              6.7%         6.7%

Includes Argos Additions and jungle.com

Through constant improvement of choice, value and convenience for its
customers, Argos continues to deliver strong sales growth, while investing in
improving its infrastructure and rolling out new initiatives.

Improved choice: Argos has continued to increase the choice of products and
services available to its customers. The total number of lines in the Spring/
Summer 2001 catalogue is now over 8,500, up by 14%. White goods have been
successfully established and product ranges extended in furniture and home
office.

Improved value: During the year, buying gains have been re-invested in lower
prices, while still improving the overall gross margin. For example, the
average price of products re-included in the Spring 2001 catalogue was 3%
lower than a year earlier. Prices are constantly reviewed during the life of
the catalogue and over 20% of product prices are normally reduced during the
season.

Improved convenience: During the year, Argos opened 12 more stores, bringing
the total to 472. It completed in-store improvements and new layouts in all
stores, as well as fully refurbishing a further 64 stores. Argos Direct, the
delivery to home operation, accounted for 12% of sales during the year, up
from 10% previously.

Sales in the full year, excluding Argos Additions and jungle.com, were ahead
by 11%, of which new space contributed 3% and like-for-like growth 8%. The
single catalogue, which was introduced in August 1999 to offer 30% more
products in Argos' 350 smaller stores, was the biggest driver of the 11%
like-for-like sales growth seen in the first half of the year. Following the
anniversary of the single catalogue, Argos maintained strong momentum in the
second half of the year, with like-for-like growth of 6%. Sales benefited from
particularly strong performances in furniture, mobile phones and jewellery.

Gross margins were firm, driven by improved product mix, enhanced buying terms
and more direct importing, which has more than doubled to over 10% of sales in
the last two years. There has been significant investment during the year at
Argos in systems, in e-commerce and in the start of a major supply chain
programme. Excluding Argos Additions and jungle.com, operating profit at Argos
grew by over 20%.

In the coming year, Argos plans to open about another 15 new stores, refurbish
approximately 50 stores and further widen the product choice with, for
example, a trial in nearly 100 stores of an Office at Home catalogue.
Increased uptake of the Argos store card is also expected to help merchandise
sales.

Argos Additions

The Argos Additions catalogue was launched into test markets in August 1999 to
provide Argos customers with a good value fashion and home offer, for delivery
to home, office or store. Fashion accounts for about 70% of lines. Its aim is
to create a profitable new business with annual sales of up to £300m within
three years, leveraging the Argos customer base, the ARG product pool and
Reality's fulfilment infrastructure.

Argos Additions was rolled out to all UK stores in January 2001 and has met
all expectations in these early stages in terms of sales, catalogue offtake,
conversion and size and frequency of purchases. Orders can now be processed at
all Argos tills following systems development, while the Additions website
accounted for 5% of demand during the year.

Sales at Argos Additions were £55m in 2001, resulting in a loss in line with
expectations of £7.7m. This covered the costs of national rollout, systems
development and growing the customer base.

In the current year, Argos Additions is testing different forms of marketing
support and promotions to grow customer numbers and improve customer
retention.

jungle.com

Since its acquisition in September 2000, jungle.com has generated sales of £
44m, with an operating loss of £1.3m. A new scaleable, enterprise-wide system
is being introduced to improve operational efficiencies. Buying improvements
are being made and new product ranges are being introduced to broaden the
customer offer. jungle.com continues to appear regularly in the top five most
visited retail websites in the UK.

Home Shopping UK and Ireland
12 months to 31 March           2001      2000                underlying change
Sales £m                       1,540     1,622                              -5%
Operating profit £m*            25.1      11.8                              +8%
Operating margin *              1.6%      0.7%


    *     operating profit in 2000 is after charging £11.5m of redundancy and
    restructuring costs. In 2001, these categories of costs have been charged
    to exceptional items

In June 2000, GUS announced its intention to stabilise UK agency home shopping
profits by reducing costs, concentrating on profitable customers and building
market share in direct home shopping.

The year under review has seen considerable progress in achieving these
objectives:


  * marketing spend has been reduced by £20m to stop recruiting unprofitable
    customers, while focusing the remaining spend on building loyalty among
    profitable customers. As a result, the active agency customer base has
    fallen by 12% to 3.0m, while average spend per customer is 8% higher. GUS'
    share of the declining agency home shopping market has, however, grown
    this year;

  * other costs have been reduced by £15m, with savings from Reality of £7m;

  * the plan to achieve £80m annual savings over three years is on track;
    and

  * UK Home Shopping has supported the rollout of Argos Additions, through
    the sourcing and merchandising of its product range. Combined revenues for
    Argos Additions and UK Home Shopping were down by less than 2% on last
    year.

Sales in UK Home Shopping separately were down 5% year-on-year, largely
reflecting the planned reduction in recruitment spend. Sales in the back end
of the book (home and leisure products) were up 3% in the year, with fashion
down by over 10%. Gross margins were maintained, with reduced markdowns
offsetting the trend towards lower margin home and leisure products. As a
result of the cost savings discussed above, profits were up 8% year-on-year,
excluding the £11.5m of restructuring costs charged to profit in the year to
March 2000.

A key part of the marketing promotion has been the targeted use of 'Buy Now
Pay Later' offers. Although these promotions affect cashflow, they are
attractive to customers, especially when buying higher priced items. They will
remain part of the marketing strategy.

The main objective in the current year remains the stabilisation of profits
via ongoing cost saving programmes, while testing growth opportunities and
improvements in the customer proposition. Home Shopping is trialling a
mid-season fashion catalogue as well as new direct brands and test-launching a
variety of new services.



Financial Services
12 months to 31 March                                         2001        2000
Operating profit £m                                            4.5        14.4

Financial Services comprise the insurance and banking businesses, which were
previously part of the Finance Division, together with the provision of a
range of financial services such as insurance, warranties, personal loans and
store and credit cards to Argos Retail Group customers. Profit for the year
has been reduced by £8.0m, primarily due to the launch costs of the Argos
store card, with the remainder arising from trials of a Home Shopping credit
card. As previously indicated, development spend is expected to peak at up to
£25m in 2002.

The Argos store card was launched in October 2000 in 86 stores and rolled out
nationally in January 2001 to all channels (stores, Argos Direct and Argos
Additions). By mid May, over 200,000 cards had been issued to customers, which
is ahead of expectations. Early indications of repeat usage are encouraging
and should support future sales growth at Argos. All account processing and
management systems have been developed in-house with the help of Experian and
Reality.

Home Shopping Continental Europe
12 months to 31 March        2001     2000                  underlying change *
Sales £m                      322      337                                  +5%
Operating profit £m          21.7     25.1                                  +2%
Operating margin             6.7%     7.4%


    *     at constant exchange rates, excluding the Dutch retail furniture
    business which was sold in September 1999, and excluding Universal
    Versand, which was sold on 31 March 2001

Our Continental European home shopping operations continue to operate in
competitive markets. Wehkamp has maintained its position as market leader in
Holland, while our Swedish business is starting to benefit from synergies in
logistics and buying with ARG in the UK. We sold Universal Versand, our
loss-making Austrian home shopping business, on 31 March 2001.

At constant exchange rates and excluding the Dutch retail furniture business
and Universal Versand which have been sold, sales were up 5% and profits up by
2%. The weakness of the euro reduced reported sales by £13m and profits by £
0.9m in the year.

REALITY
12 months to 31 March                               2001      2000       change
Sales to external customers £m                        93        77         +21%
Sales to ARG £m                                      383       367          +4%
Total sales £m                                       476       444          +7%
Operating profit £m                                  5.1       2.8          n/a
Operating margin *                                  5.5%      3.6%

*     operating profit as % of sales to external customers.

Reality was formed in May 2000, combining call centre and logistics assets
from UK Home Shopping with the newly acquired Reality Solutions web design
business. Argos Retail Group is its largest customer, accounting for 80% of
sales. Reality has two main objectives: to improve the efficiency of its cost
base for the benefit of both ARG and external customers; and to increase its
business with third parties across all of its activities. 2001 saw good
progress in both.

Working with ARG

Total sales to ARG grew by 4%, with Reality instrumental in supporting the
growth of both Argos Additions and Argos Direct. Sales to these two brands
more than compensated for the decline in sales to UK Home Shopping.

Service levels, particularly in the peak Christmas trading period for parcel
deliveries, were significantly improved over the previous year.

During the year, Reality reduced the level of costs charged to Home Shopping
by £7m on a like-for-like basis. ARG was charged at cost in the year under
review. From April 2001, an arms-length service level agreement will govern
the ARG/Reality relationship setting out how future costs and benefits will be
shared.

Increasing third party business

During the first ten months of operation, Reality has won over 20 third party
contracts, with a total value in excess of £130m and an annualised sales value
over £30m. These include contracts with Readers Digest, FNRF and Deutsche
Post. In the twelve months to 31 March 2001, sales to third parties grew by
21%.

Operating profit on external sales grew to £5.1m before exceptionals,
reflecting the increase in external sales partly offset by greater investment
in management and marketing.

Looking forward, Reality will continue to invest in developing its asset base
and capabilities. In call centres, this will include further enhancements to
automated call handling capabilities to drive productivity. In logistics,
investments will be made to develop over time the offer for premium services.

BURBERRY
12 months to 31 March                    2001      2000              underlying
                                                                       change *
Sales £m                                  425       230                     47%
Operating profit £m                      69.5      21.7                     n/a
Operating margin                        16.4%      9.4%


    *     excluding the acquisition of Burberry Spain, discontinued Wholesale
    activities and at constant exchange rates

Burberry continued its repositioning as a world-class luxury goods brand with
a distinctly British image, building on its globally recognised icons
including the check and the trenchcoat. Burberry products are sold through 58
directly-operated stores, as well as through leading speciality retailers
worldwide.

Included in the Appendix are further details of the breakdown of Burberry's
sales by product, by region and by distribution channel.

The year under review has seen significant progress:


  * demand for Burberry products grew significantly both from existing and
    new customers, buoyed by product innovation and new ranges. Accessories in
    particular saw strong growth, with sales doubling in directly-operated
    stores;

  * the New Bond Street flagship store was opened in August 2000, showcasing
    the repositioned brand. Its financial performance has exceeded
    expectations. It will be the model for future stores and was used as a
    prototype for the first free-standing Burberry store in Japan which was
    opened on the Ginza in Tokyo in December 2000;

  * the property adjacent to Burberry's New York store was purchased in
    October 2000. This will double the existing selling area on 57th Street
    when the new flagship store opens in Autumn 2002;

  * Burberry's global product licensing activities focused on growing
    specific ranges such as sunglasses and fragrance. The new Burberry Touch
    perfume was launched in Autumn 2000 and has since achieved over £40m of
    revenue at retail value;

  * Burberry is a leading international brand in Japan and its licensees'
    sales grew during the year, despite weakness in the local economy. The
    renegotiated Japanese licence contributed strongly to profits in the year;

  * the acquisition of the Burberry licensee in Spain in June 2000, for £
    137m plus an earnout of up to £26m, was earnings-enhancing and brought an
    infrastructure and strong management team to aid Burberry's growth in
    Europe;

  * the management team was further strengthened during the year, with
    appointments in Design, Human Resources, Finance and Information
    Technology; and

  * Burberry continued to rationalise its operations, selling its sock
    manufacturing business and withdrawing certain ranges.



Burberry achieved a record operating profit of £69.5m in the year. Sales,
excluding Spain and discontinued Wholesale activities, rose by 47% at constant
exchange rates in the full year, with wholesale up by over 50% and retail up
by over 30%. Operating profit benefited from this strong sales growth, as well
as an increased contribution from the Japanese licence (£14m at constant
exchange rates) and a nine-month contribution from Spain (£17m). Operating
margin increased strongly to 16.4%, even after further significant investment
in infrastructure, design and marketing, as well as costs associated with the
preparation for the planned IPO.

Burberry Spain has contributed sales of £118m and profits of £17m since
acquisition. For the twelve months to March 2001, sales and profits increased
by 8% and 3% respectively in local currency.

Since the start of the current financial year, Burberry has made further
progress in:


  * continued range extensions and product innovation, while carefully
    managing the use of the icon check;

  * the appointment of a new Design Director, to work with its in-house
    teams;

  * developing new stores. New retail sites have been secured in Beverly
    Hills and Westchester, New York, with a replacement site agreed in
    Dusseldorf;

  * an extensive store refurbishment programme, covering such stores as
    Chicago, Paris and Berlin;

  * extending its presence in premier department stores, with shop-in-shops;

  * identifying synergies with Burberry Spain in sourcing, production and
    distribution;

  * strengthening its infrastructure. In summer 2001, Burberry will bring
    together its UK-based design, marketing and administrative staff into one
    central London site; and

  * taking a greater share of the value chain in Asia. Burberry's existing
    distribution, agency and licensing arrangements in Asia-Pacific, excluding
    Japan, will come to an end in December 2001. It is intended that Burberry
    will take control of them in January 2002. This will help enhance the
    consistency of Burberry's marketing and merchandising throughout the world
    and will increase its profitability. More details will be provided later
    in the year when the new arrangements have been finalised.




END

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