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Burberry Group PLC (BRBY)

  Print          Annual reports

Wednesday 10 June, 2020

Burberry Group PLC

Annual Financial Report

RNS Number : 5940P
Burberry Group PLC
10 June 2020

10 June 2020


Burberry Group plc - Annual Financial Report

The following documents have today been made available to shareholders of Burberry Group plc

(the "Company"):


1.  Annual Report and Accounts for the financial year ended 28 March 2020;

2.  Notice of the 2020 Annual General Meeting; and

3.  Form of Proxy for the 2020 Annual General Meeting.

Pursuant to Listing Rule 9.6.1, each of these documents has been submitted to the National Storage Mechanism and they will shortly be available for inspection at .

The documents are also available on the Company's website at

The 2020 Annual General Meeting (the "AGM") will take place at 11.00am on Wednesday, 15 July 2020 at  Horseferry House, Horseferry Road, London, SW1P 2AW. Please note that due to restrictions related to COVID-19 this is a closed meeting and shareholders will not be able to attend.  Shareholders are encouraged to vote in advance either electronically or by submitting their Form of Proxy appointing the Chairman of the Meeting as proxy.  Shareholders are also invited to submit questions in advance of the meeting as detailed in the Notice of AGM. Questions should be received no later than 11.00am on Monday, 11 July 2020. The total of the votes cast by shareholders for or against or withheld on each resolution to be put to the meeting will be published on as soon as possible after the meeting.

In compliance with Disclosure Guidance and Transparency Rule ("DTR") 6.3.5, the information in the Appendix below is extracted from the Company's Annual Report and Accounts for the financial year ended 28 March 2020 (the "2019/20 Annual Report and Accounts") and should be read in conjunction with the Company's preliminary announcement issued on 22 May 2020 (the "Preliminary Announcement"), both of which can be viewed at . Together these constitute the material required by DTR 6.3.5 to be communicated to the media in unedited full text through a Regulatory Information Service. This material is not a substitute for reading the 2019/20 Annual Report and Accounts in full. Page numbers and cross-references in the extracted information below refer to page numbers and cross-references in the 2019/20 Annual Report and Accounts.

The information contained in this announcement and in the Preliminary Announcement does not constitute the Company's statutory accounts, but is derived from those statutory accounts. The statutory accounts for the financial year ended 28 March 2020 have been approved by the Board and will be delivered to the Registrar of Companies following the AGM.


Investors and analysts  
Annabel Gleeson
VP, Investor Relations  

[email protected]
020 3367 4458

Andrew Roberts
VP, Corporate Relations

[email protected]
020 3367 3764



The Preliminary Announcement includes a condensed set of financial statements. Audited financial statements for the financial year ended 28 March 2020 are contained in the 2019/20 Annual Report and Accounts. The Independent Auditors' Report on the Company financial statements and the parent company financial statements (the "Audit Report") is set out in full on pages 195 to 203 of the 2019/20 Annual Report and Accounts. The Audit Report is unqualified and does not contain any statements under section 498(2) (regarding adequacy of accounting records and returns) or under section 498(3) (regarding provision of necessary information and explanations) of the Companies Act 2006.


The following information is extracted from page 194 of the 2019/20 Annual Report and Accounts.

The directors consider that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group and the Company's position and performance, business model and strategy.

Each of the directors, whose names and functions are listed on pages 124 to 127 confirm that, to the best of their knowledge:

the Company financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 'Reduced Disclosure Framework', and applicable law), give a true and fair view of the assets,  liabilities, financial position and profit of the Company;

the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of  the assets, liabilities, financial position and profit of the Group; and

-      the Strategic Report includes a fair review of the development and performance of the business and the position of the Group and the Company, together with a description of the principal risks and uncertainties that it faces.


The following information is extracted from pages 92 to 111 of the 2019/20 Annual Report and Accounts.


The Group's strategy takes into account risks, as well as opportunities, which need to be actively managed. Effective risk management is essential to executing our strategy, achieving sustainable shareholder value, protecting the brand and ensuring good governance.

The Board is ultimately responsible for determining the nature and extent of the principal risks it is willing to take to achieve our strategic objectives (the Board's risk appetite), and challenging management's implementation of effective systems of risk identification, assessment and mitigation.

The Audit Committee has been delegated the responsibility for reviewing the effectiveness of the Group's internal controls and risk management arrangements. Ongoing review of these controls is provided through internal governance processes and the work of the Group functions is overseen by the Executive Committee, particularly the work of Group Risk and Internal Audit and the Risk and Ethics Committees.

An integral part of our business, our risk management process is co-ordinated by our Group Risk and Assurance team, reporting to our Chief Operating and Financial Officer. Risk management activities include identifying risks, undertaking risk assessments and determining mitigating actions. These activities are reviewed by our Internal Audit and other control functions, which provide assurance to our Risk Committee, and ultimately to our Board, as shown in the diagram on page 128.



The Board reviews and validates the Group's risk appetite on an annual basis. This is integrated into our wider risk management framework to support better decision-making and prioritisation.

We will pursue growth and are prepared to accept a certain level of risk to firmly establish our position in luxury fashion and inspire our customers. We operate in a competitive, dynamic sector with long-term growth potential. Within categories of risk, our tolerance for risk may vary.

Complying with applicable laws and doing the right thing is part of our culture and underpins our strategic ambition. In exploring risks and opportunities, we prioritise the interests and safety of our customers and employees, we seek to protect the long-term value and reputation of the brand, maximising commercial benefits to support responsible and sustainable global growth within our defined risk tolerance.


The Board considers the principal risks to be the most significant risks faced by the Group and those that are the most material to our performance and that could threaten our business model or the future long-term performance, solvency or liquidity of Burberry. They do not comprise all the risks associated with our business and are not set out in priority order. Additional risks not known to management at present, or currently deemed to be less material, may also have an adverse effect on our business.

COVID-19 was declared a global pandemic on 11 March 2020 by the World Health Organization, with unprecedented restrictive measures being been put in place worldwide to help prevent the spread of COVID-19, ensure safety and wellbeing, protect health services and try and stabilise the economy. Information on how the impact of COVID-19 on Burberry has been addressed in the FY 2019/20 accounts is as follows:

1.  The impact on the fourth quarter of FY 2019/20 trading performance is explained on pages 84-89. The high level of uncertainty and the severity of the disruption has negatively impacted the global economy resulting in downturns in consumer confidence and demand across the luxury fashion industry. Burberry saw a significant impact on our results in the final quarter of the FY 2019/20 including one-off charges of £240.9m.


2.  The continuing spread of COVID-19 and the associated restrictions on public life are expected to significantly impact FY 2020/21 trading performance, however, the impact and timing of the return to normality and growth is uncertain. The potential impact on FY 2020/21 and beyond has been estimated by modelling various sales, supply chain, cost and liquidity scenarios based on a range of scientific and economic assumptions and considering various mitigating activities to reduce the impact on cash and EBIT. This work is summarised and explained on page 84.


3.  Risk disclosures have been dealt with as follows:


·   The risk of prolonged COVID-19 disruption, beyond the range of assumptions that have been used to develop the reasonably expected outcomes, has been incorporated as a new principal risk for the Group.

· The impact on each of the other principal risks from the pandemic is also explained in the detail for each risk.

The macro-economic risk includes the risk of a deep global economic recession, which is considered to be one of the most significant possible future impacts.


4.  For the Viability Statement the risks of the pandemic and the potential repercussions for the global economy on trading performance have been incorporated in modelling a range of outcomes together with revenue and cost sensitivities, and as part of the stress testing of the liquidity needed to support the Group ' s strategic plan. We have conducted reverse stress testing to identify the theoretical loss of revenue and liquidity that the Group could manage without impacting its viability.

Our risk framework is structured around the following categories of risk: External, Strategic and Financial, Operational, Compliance and Climate Change. Each principal risk is linked to one of these categories and may impact one or more of our strategic priorities.

We have reviewed and updated the descriptions and mitigating actions of our principal risks and have added new emerging external risks, including the further disruption caused by the COVID-19 pandemic, and any new strategic priorities that have been announced. We reviewed whether the level of risk associated with each of the principal risks is increasing or decreasing compared to the previous financial year and noted new risks, which do not have a basis for comparison.

Our risk management processes are designed to enable us to identify risks that can be partially mitigated through insurance.  We focus our insurance resources on the most critical areas, or where there is a legal requirement, and where we can get best value for money for risk transfer.


Potential emerging risks are an area of focus. We undertake horizon scanning in conjunction with our strategy team to monitor any potential risks that could change our industry and/or our business, looking at both the inherent risk and opportunity. Emerging risks are new and evolving, and thus their full potential impact is still uncertain. To manage this, we involve specialist third parties where necessary to understand how our risk profile could change over a longer time period. Our risk management approach considers short term to be one year, medium term to be two to five years and long term more than five years.




Pandemics: impact of the COVID-19 pandemic may be prolonged, leading to longer-term disruptions to supply chain, shifts in consumer demand, and travel restrictions

Protectionism: countries protecting domestic production may use tariffs and trade restrictions, which would increase the cost of moving goods into key markets

Changing regulatory environment: financial reporting regulation may increase the risk of non-compliance


Changing consumer preferences: increased expectations around product and Company sustainability

Significance of influential groups/individuals on consumer spending patterns: for example, growing influence of Gen Z on entire consumer base through social media


Industry concentration: increase in concentration on key consumer groups resulting in greater competition for growth targets

Emerging disrupter brands: trend for pop-up and emerging brands increases as a market share and attracts Burberry ' s consumer

New technology: leading to changes in consumer spending habits, for example virtual stores

Circularity: new business models and increase in product re-sale markets, including fashion rental

Full supply chain traceability: requiring investment in new technologies





Responsible for regular oversight of risk management, annual strategic risk review, and setting the Group's risk appetite.

Monitors risks through Board processes, including regular reviews of strategy, management reports and deep dives into selected risk areas.

Audit Committee reviews effectiveness of risk management process with

support from Internal Audit.





Reviews external and internal environment for emerging risks. Performs deep-dive reviews of principal risks.


Reviews risk register updates from risk owners.

Meets at least three times per year and reports key findings to the Audit Committee.


Cross-functional attendees, encompassing senior management from IT, Finance, Legal, HR, Supply Chain and Retail.

Identifies changes to principal  risks and the effectiveness and adequacy of

mitigating actions to achieve agreed risk tolerance levels.








• Establishes risk



• Identifies emerging risks, working with the Strategy team.

• Facilitates risk assessments and updates to risk mitigations.

• Provides resources

and training to

support risk

management process.

• Facilitates strategic risk assessment as part of the central planning process.

• Prepares Board and Risk Committee


• Reviews and monitors ethical risks, as well as behavioural and responsibility practices across the Group. Approves policies relating to such ethical matters, including the Group's Code of Conduct.

• Performs deep-dive reviews and assesses results of investigations

and corrective actions.

• Supports the Group in managing ethical and associated reputational

risks, including overseeing awareness

and training across the Group to reinforce business ethics and good practice.

• Monitors whistleblower activity and Burberry Confidential.



• Carry out day-to-day

risk management


• Identify and assess

risk and implement

mitigating actions.

• Assign owners to update risk registers.


• Review risk

management process


• Compliance functions provide independent

assurance to

management and the Board on risk status (Health and Safety, Legal, Brand Protection, Quality, Asset and Profit Protection,

Corporate Responsibility).







The timing of a return to growth following the COVID-19 pandemic is uncertain. There is a risk that the spread of the COVID-19 pandemic continues and/or the recovery is prolonged. In response to COVID-19, we have prepared a number of planning scenarios based on a range of assumptions and potential outcomes. The risk remains of further significant impact on our future operations, cash flows and viability beyond the range of assumptions that have been used to develop the modelled scenarios. In addition, there could be impacts on impairment of retail assets, inventory and carrying value of assets.

Risk movement and outlook

COVID-19 is a new principal risk this year. While the group had considered the possibility of a range of incidents that could disrupt a key business location, the likelihood of the occurrence of a global pandemic causing disruption on the scale of COVID-19 across the business had not been considered as a stand-alone risk. Although there is continued uncertainty about the timing of a return to growth, we remain confident in our strategy to reposition Burberry firmly in luxury fashion and are committed to the strategic vision for Burberry. Our strategic initiatives have been shaped to the current situation with focussed execution to ensure a successful recovery.




The timeframe of implementing the strategy has been impacted by COVID-19, however the fundamentals and trajectory of our strategy remain right.

• The Group Incident Management Team (GIMT) was set up to co-ordinate the business response to the COVID-19 outbreak. The

Group ' s response is being managed through five key workstreams led by the Executive Committee and chaired by our CEO.

The health and safety of our people is paramount. The key focus of our response has been on our people, our customers and our communities. We have prioritised their wellbeing and communicated regularly with all our


We have devised a plan of strategic initiatives to navigate through this period of decreased demand and capture opportunities as consumer confidence and markets rebound.

Burberry has significant financial headroom in the form of £0.9 billion cash balances including £0.3 billion drawn from the Revolving Credit Facility. The Group has completed detailed stress testing to understand the extent to which the Group could withstand a loss of sales

within the limits of its available financial resources. Details of this stress testing are set out in the viability assessment on page 117.

We closed sites across Asia, EMEIA and the Americas, ahead or in line with government restrictions in order to prevent the spread of COVID-19 and ensure our employees ' , our customers ' and our communities ' safety and wellbeing. This includes the closure of our head

office in London as well as internal manufacturing sites across the UK and in Italy.

As part of our overarching response we are monitoring the regulatory landscape. We are engaging regularly with government and local authorities in each of our core geographies to ensure we have the right support for our business and for our people.

We are managing cash and costs to protect the Group ' s liquidity. A comprehensive cost mitigation programme has been established, which includes delaying discretionary capital

expenditure to focus only on that which is essential and to strengthen the brand.

We keep product, inventory and supply chain under constant review to maintain supply chain operations while optimising buying commitments.

We have adapted our technology for greater home working to ensure all vital operations and projects remain on track. A dedicated support page and helpline has been set up to support

employees with any concerns they have.



Doing the right thing is part of Burberry ' s culture and underpins our strategic ambition. Burberry has prioritised the safety and wellbeing of our people, our customers and our communities. We have followed all government and health authority guidance and advice to reduce the risk of spreading the virus and have supported relief efforts to reduce the impact of the virus on peoples ' lives globally.


• Further increase in the spread of the pandemic results in the loss of key employees and/or impacts the health of our employees and their ability to operate effectively.

• There is not sufficient liquidity to manage operations and meet liabilities as they fall due.

• The Group ' s trading performance and cash flows are significantly impacted by further extended periods of closures of Burberry retail stores, manufacturing facilities and distribution centres imposed by governments.

• Further impairment of retail assets and inventory.

  Continuing closure of retail stores impacts our cash generation, increases leverage and limits our ability to source adequate financing to continue to operate.

• The rebound is delayed by a resurgence in virus infections particularly in Mainland China.

The continued outbreak impacts the ability of

the Group to execute the strategic plan and

maintain momentum in building brand heat.

Closures of Burberry ' s internal manufacturing

sites and global network of storage and distribution hubs significantly impacts the supply chain and the speed we can rebound when

government restrictions are lifted.

Technology and IT infrastructure is not able to

adapt to sustained working from home requirements imposed by governments.








The Group operates in a wide range of markets and is exposed to changing economic, regulatory, social and political developments that may impact consumer demand, disrupt operations and impact profitability. Adverse macroeconomic conditions or country-specific changes to the operating or regulatory environment, natural disaster, global health emergency or civil unrest may impact the spending habits of key consumer groups and lead to increased operational costs.

Risk movement and outlook

The risk is deemed to have increased in the year and the outlook is uncertain due to a number of significant macroeconomic and political events such as the protests in Hong Kong S.A.R. and is overlapped by the COVID-19 risk. External factors such as global health emergencies and natural disasters are difficult to predict.



Volatility in the external environment could impact our overall financial performance and operations.

We have defined a strategy that leverages our

brand appeal and global reach across multiple

customer segments and regions to mitigate

reliance on a particular customer group, however, we recognise the importance of

Mainland China and the Chinese consumer to

the luxury industry, as explained in the Global

Chinese Consumer Spending risk.

In the short term, we continue to assess shifts

occurring in the industry and with customers

to ensure our plans are dynamic and responsive

to the market.

We monitor external macroeconomic and

regulatory changes and perform horizon

scanning supported by insights from the

Treasury and Strategy teams into

macroeconomic trends.


We have a low tolerance for risk in this area but recognise external factors can be more difficult to mitigate as they are often outside of our control.


Unexpected shifts in domestic or tourist demand from key customer groups due to uncertainty in the economic outlook for the  luxury sector caused by global recession, socio-political tensions.

Global health emergencies affecting particular countries and regions.

Unexpected disruptions to the supply chain.



Various scenarios could impact the Group ' s financial position, operating model and people.

Risk movement and outlook

This risk has increased due to elevated uncertainty over the UK ' s withdrawal from the EU on 31 December 2020 given the disruption to trade negotiations caused by the COVID-19 pandemic and the limited time available to secure a comprehensive free trade agreement.



Volatility arising from uncertainty around the trading relationship between the UK and the EU following the end of the transition period may impact our overall financial and operating performance, as well as our ambitions with respect to supply chain Operational Excellence.

Our steering committee continually monitors

the evolving impact of the post-transition

trading relationship between the UK and the

EU, and oversees our approach.

While the transition period until 31 December

2020 offers temporary relief, we are prepared

for a no-trade-deal scenario at the end of 2020

across all business activities, including supply

chain, trade compliance, intellectual property

and people.

We engage with UK Government departments

and other external stakeholders to ensure they

are fully informed of our circumstances.


We have a low tolerance for risk arising from uncertainty regarding the trading relationship between the UK and the EU following the end

of the transition period, which may have a long-term impact.


Additional customs duty based on the post-transition trading relationship between the UK and the EU, and cessation of the UK ' s access to the EU ' s free trade agreements after 2020.

Disruption to business operations.

Impact on some current business project road maps.

Extended supply chain lead times could increase inventory levels.

Uncertainty over the rights of EU nationals and UK immigration law could increase the risk of being unable to recruit and retain talent.

Exchange rate volatility impacts Group revenues, margins, profits and cash flow.




Focused execution of the strategy through our four  strategic pillars (Product, Communication, Distribution and Digital) is key to sustainable shareholder value. Success depends on the value and relevance of our brand to luxury consumers around the world and our ability to innovate.

Inability to execute the projects that underpin these strategies successfully could result in under-delivery on the expected growth, productivity and efficiency targets. This could have a significant impact on the value of the business and market confidence.

We operate in the global luxury market, where competition is intensifying. Today ' s luxury consumers are increasingly more demanding of luxury brands, seeking creativity, inspiration and a meaningful connection, quality and innovation. Our ability to make the right strategic investment decisions in response to these changes is vital to our success.

Risk movement and outlook

We have reviewed the impact of the COVID-19 pandemic on the luxury industry and consumer demand, and assessed the need for changes to our strategic plan. Although the timeframe of implementing the strategy has been impacted, the fundamentals and trajectory of our strategy remain right.



All strategic pillars.

FY 2019/20 marked the end of our multi-year strategy ' s first phase, which focused on re-energising the brand, optimising our distribution networks and ensuring a smooth creative

transition to reflect Riccardo Tisci ' s vision for Burberry.

The strategy team and creative business owners for each pillar co-ordinate delivery of the programme, monitor the risks associated with each of the major programmes, and track progress and benefits.

We have increased our focus on measuring progress in our transformation. We have designed a set of lead indicators to assess progress in product, communications, store

performance and service.

We continued to strengthen consumers ' perception of our brand, signalling luxury through our campaigns and disruptive media experiences.

We continued to deliver newness and exceptional product, having established our new product architecture and strengthening in leather.

We have made good headway in transforming our distribution channels by aligning our mainline stores to the new creative vision, and completing the transition of our US wholesale to

luxury fashion.

On digital, we remained focus on strengthening our relationship with customers with unexpected and innovative activations, such as games and social drops.

Our Inspired People initiatives include leading the Groupwide Engagement Survey. This has shown a marked increase in the understanding of our strategic goals and transformation plan within the Group.

Within the business, we prioritised building resilience in a period characterised by exceptional uncertainty by taking a series of rapid actions across four areas: protecting our people and communities; tightly managing cash and costs; securing our product, inventory and supply chain; and driving revenue.

We have devised a plan of strategic initiatives set out on page 30 to navigate through this period of decreased demand due to the COVID-19 pandemic and capture opportunities as consumer confidence and markets rebound.




We will pursue growth and accept a certain level of risk to ignite brand heat and continue our transition to firmly establish our position in luxury fashion. We approve capital investment in strategic projects and accept moderate to high earnings volatility in pursuit of innovation and profitable growth, balancing a reasonable return on capital for a reasonable level of commercial risk within the approved capital allocation framework.


• Firmly positioning the brand in luxury fashion is

dependent on creating new and high quality  luxury products that excite our global customers. If we are unable to innovate effectively and get these new products into the market with speed, our sales or margins could be adversely affected.

• Our development and deployment of content

through communication channels does not create sufficient brand heat and engagement globally.

• We do not achieve the required organisational alignment and enhance our capabilities and culture to compete and grow effectively and at the pace required to deliver the targets.

• Failure to sufficiently transform operational

processes could undermine our ability to

deliver the required cost savings and

margin improvements.

• Failure to deliver the technology innovation

required to empower changes in the Group's

business model and to deliver the anticipated

benefits from key investment strategies in

Digital, Retail and Group Operations.

A pause to delivery of the strategy due to major external factors reduces momentum in building brand heat and reduced consumer confidence.

Inability to capture demand as consumers become more discerning in their purchases amid overall demand decreasing in a global recession.



The Group carefully safeguards its image and reputational assets. Unfavourable incidents, unethical behaviour or erroneous media coverage relating to the Group's senior executives, products, practices or supply chain operations could damage the Group's reputation.

As our customers continue to engage with the brand through multiple channels including social media, a misleading perception of the Group's values and performance could potentially lead to a slowdown in sales.

Burberry's increasing reliance on influencers in its marketing and on collaborations in product design exposes the Group to increased reputational risk.

Risk movement and outlook

While internal enhancements have been made to further safeguard Burberry ' s image and reputation, in the current environment there is increased scrutiny of Burberry. The external environment of collaborators and influencers is dynamic, which creates risk. Therefore constant monitoring is required to ensure that Burberry ' s image and reputation is protected.



All strategic pillars.

• Training and monitoring of adherence by personnel to the requirements in the Group's Responsible Business Principles.

• Codified incident management policy, monitoring of social networks and response procedures.

• Oversight of mitigation of reputational issues by the Ethics and Risk Committees.

• The Group has established Corporate Responsibility (CR) standards, which aim to ensure compliance with labour, human rights, health and safety and environmental standards across our operations and extended supply chain.

• Supplier audits and supplier training programmes are examples of the actions and programmes that have been put in place in day-to-day operations.

• Strengthening our approval processes and editorial controls to ensure all product and content is reviewed and signed off prior to external release.

Onboarding of a Director of Diversity and Inclusion; development of a global Diversity and Inclusion strategy, and the creation of an External Advisory Council comprised of thought leaders across the diversity and inclusion landscape to provide insight and help raise

Burberry ' s consciousness and understanding of social issues. Creation of an Internal Diversity and Inclusion Council to support the implementation of the strategy.

• Increasing awareness of and training with respect to Burberry's Model Well being Policy to all people who engage with model on Burberry's behalf, including employees, freelancers, casting agents, contractors and

external third parties to ensure they adhere to the policy.


Protecting the brand and its reputation globally is at the heart of everything we do. We have a moderate risk appetite in order to deliver our strategy supported by processes to avoid or mitigate any reputational/brand risk where possible.


• An unfavourable incident relating to a senior executive, erroneous media coverage or negative discussions on social networks could damage Burberry's reputation.

• A celebrity, influencer, collaborator or model associated with Burberry becoming involved in a reputational incident could potentially lead to pressure on Burberry to distance the brand from them and could reflect poorly on Burberry, negatively impacting Burberry's reputation.

• Unfavourable or erroneous media coverage or negative discussions on social networks about the Group's products, content or practices could impact brand reputation.

• Unethical behaviour on the part of individuals or entities connected with the Group could attract negative attention to the brand.

• If suppliers or partners do not respect the Group's Responsible Business Principles this could reflect negatively on Burberry.

• Failure of employees or those acting on Burberry's behalf to adhere to Burberry's Model Well being Policy could result in reputational or legal risk.

• Failure to understand social issues and respect cultural sensitivities around product could negatively impact Burberry's reputation.




Global Chinese consumer spending patterns significantly change having an immediate adverse impact on Group sales. Any significant change to Chinese consumer spending habits globally due to changes in  economic, regulatory, social or political environment in China, including a further health emergency or a natural disaster, may adversely impact the domestic consumer group's disposable income or confidence. Such changes could also lead to Chinese consumers scaling back on travel, which could impact the Group's global revenue and profits outside Mainline China, which may not be compensated for by the repatriation of spend in China.

Risk movement and outlook

The risk has increased since the prior year. Mainland China is forecast by economists to be the only growing global economy in FY 2020/21 and remains a key market for Burberry. While our business in Mainland China has started to rebound to more normal sales levels, the Group ' s trading performance could be impacted if there is a recurrence of COVID-19 in Mainland China or the recovery is delayed.



All strategic pillars.

Burberry took prompt action across Asia to comply with local health guidelines and protect our people, our customers and our communities.

Scenario planning and analysis was undertaken to understand the long-term impact of the global pandemic on Mainland China, including a review of the fixed and variable cost strategy.

Prior to the outbreak of COVID-19 there had been significant focus on building brand heat in Mainland China. A clear strategy had been set, including building new strategic social partnerships, such as with Tencent, and strategic locations and making customer

experiences, storytelling and products more locally relevant. This strategy will continue assuming China continues to rebound from COVID-19.

Development and execution of Mainland China

strategy, including specific product designed for Lunar New Year and additional marketing spend to support growth targets.

Investment in inventory and technology to support Mainland China digital across our own platforms and those of our third-party partner platforms.

Supporting investment and growth strategies in other global markets to reduce Burberry ' s exposure to an individual country or group of customers.




We accept a certain level of concentration risk in relation to consumer nationality to maximise the greatest growth opportunities and to achieve our objective of firmly establishing our position in luxury fashion.


Increasing nervousness with investors about the dependency on growth from global Chinese consumers in FY 2020/21 and the ability of the world ' s economies to respond to the impact of the pandemic. Mainland China is the only global country where economists have forecast growth.

Slower recovery in Asia from the global pandemic because of reinfections.

Burberry ' s growth from Asia does not meet the

expectations either in magnitude or timing, especially in Mainland China.

We suffer a major reputational shock in Mainland China causing brand fallout.

We are unable to recapture our share of the spend in Mainland China because of the strength and success of our competitors, for example, in marketing campaigns and investment in brand heat.

We are unable to capture additional consumer spend in Mainland China to offset the loss of revenue as a result of disruptions in Hong Kong S.A.R.





Volatility in foreign exchange rates could have a significant impact on the Group's reported results. Burberry is exposed to uncertainty through foreign exchange movements. Major events such as the COVID-19 pandemic and the outcome of the UK ' s withdrawal from the EU may have a major impact on foreign exchange rates, which in turn could cause significant change in our Group reported results.

Risk movement and outlook

The risk is deemed to have increased substantially since the prior year primarily as a result of COVID-19 and the UK ' s withdrawal from the European Union. Foreign exchange is expected to remain volatile in FY 2020/21 as the actions taken by governments globally in response to the COVID-19 pandemic and other macro-economic and political factors, such as the election in the USA, are absorbed.



Volatility in foreign exchange rates could impact our overall financial performance. 

• Burberry seeks to hedge anticipated foreign currency transactional cash flows using financial instruments. These are mainly in Burberry's centralised supply chain and wholesale business. Burberry does not hedge intragroup foreign currency transactions at present.

• Burberry monitors the desirability of hedging the net assets of non-pound sterling subsidiaries when translated into pound sterling for reporting purposes. We have only entered into modest transactions for this purpose in the current and previous year.

• Burberry monitors the overall impact of unhedged exchange movements and provides guidance to shareholders if exchange rates move on a quarterly basis.


Burberry does not seek to manage structural foreign exchange risk relating to its overseas retail operations.


• Burberry operates on a global basis and earns revenues, incurs costs and makes investments in a number of currencies. Burberry's financial results are reported in pound sterling. Most reported revenues are earned in non-pound

sterling currencies, with a significant proportion of costs in pound sterling. Therefore, changes in exchange rates, which are driven by several factors, such as global economic trends, the COVID-19 pandemic and the form of the UK's withdrawal from the EU, could impact Burberry's revenues, margins, profits and cash flows.

• Changes in exchange rates driven by global economic trends could reduce the attractiveness of international shopping for travelling tourists.







A cyberattack results in a system outage, impacting core operations and/or results in a major data loss leading to reputational damage and financial loss.

A cyber risk-aware workforce and the Group's technology environment is critical to success. A robust control environment helps decrease the risks to core business operations and/or major data loss.

Risk movement and outlook

The impact and likelihood of this risk is assessed to have increased as a result of the COVID-19 pandemic.



Having a cyber risk-aware workforce and resilient technology landscape is integral to delivering our business strategy.

Governance provided through a cross-functional Cyber Security Steering Group with Executive membership and sponsorship.

Continued investment in Information Security


Second line assurance checks reporting on control effectiveness to Executive and IT management through monthly scorecards.

24/7/365 Security Monitoring and Analytics

capability supported by robust security incident

response processes.

Information Security Advisory function to embed security in new projects and initiatives.

Security Training and Awareness and phishing

tests rolled out to employees globally with

completion monitoring.

Implementation of solutions to help detect personal and sensitive data loss with improved control over user access management.

Test responses to cybersecurity incidents

through simulations.

Data Privacy Steering Committee, a cross-functional group to review data controls around existing systems and assess the potential data risks (from both a legal and reputational perspective) associated with new IT, Marketing, Retail and Digital initiatives across Burberry.

Ongoing collaboration between the Data Protection office, Legal, IT and Information Security functions to ensure policies are adhered to with respect to the appropriate collection, security, storage, retention and

deletion of personal data.





Protecting the brand and its reputation globally is at the heart of everything we do. We adopt a strategy to avoid or mitigate key reputational/brand risks wherever possible.



• Malware results in a loss of system control

causing business disruption and/or major

data loss.

• Credential compromise of customer or

employee accounts leading to business

disruption and/or major data loss.

• Accidental personal data loss or disclosure

leading to regulatory fines.

• Attack on causing business disruption and/or major data loss.

• Compromise or misconfiguration of externally

facing assets causing business disruption and/

or major data loss.

• Fines due to failure to comply with EU General Data Protection Regulation (GDPR) and/or equivalent applicable data protection

legislation globally.





Inability to attract, motivate, develop and retain our people to perform to the best of their ability in order to meet our strategic objectives.

Risk movement and outlook

The risk is deemed to have increased since the prior year, primarily in an environment of uncertainty and change as a result of the UK ' s withdrawal from the EU and the COVID-19 pandemic. Global trading disruption has impacted our people ' s ability to meet planned business goals.



Delivery of our strategy relies on our ability to engage and inspire our people to deliver outstanding results for the Group. This is accomplished through:

strengthening capabilities and enhancing our approach to talent management throughout the


fostering an inclusive culture where all employees feel connected to their work

empowering and equipping leaders to lead through change

simplifying how we work to enhance operational efficiency

rewarding performance and creating a pay for performance culture

engaging employees through our ongoing commitment to corporate responsibility

driving positive change to promote sustainability across the business



Leadership and Culture

The Leadership Development Programme ran for its second year, with two additional cohorts going through the programme to engage and equip leaders. The programme comprises 360 feedback, coaching and a three-day event. To date, the Executive Committee, senior leadership team and 150 leaders have completed the programme.

A third global Employee Engagement Survey was carried out in July 2019, with results published in September. We saw overall engagement increase by 1%, with 87% of employees confirming that they were proud to work at Burberry. Leaders are held accountable for delivering against agreed action plans.

Leaders were equipped with regular strategy updates, including talking points and regular leaders calls aimed at the director plus population, to engage their teams on the strategic direction and build a sense of belonging to the inclusive culture at Burberry. The Engagement Survey illustrated a positive shift that ' senior leaders give employees a clear picture of the direction Burberry is headed ' (from 69% in 2018 to 71% in 2019).


Talent and Careers

The identification of all critical roles was completed across the business and succession planning for all Executive Committee, Senior Leadership and key creative and commercial roles was carried out.

A framework for talent management was defined and presented to the Board of Directors; a new VP of Talent joined the organisation and will help embed the evolution of our talent management approach.

Inclusive Leadership training was delivered to 90% of all people leaders, including Retail Managers at Retail Conferences, and is now being offered as a part of our regular learning curriculum.

A recruitment toolkit and accompanying training was rolled out for all hiring

managers, ensuring that we get diverse and representative talent with the right organisational fit in a fair and consistent manner.


Reward & Recognition

A simplified, more effective performance management process across the business has been rolled out with a five-point performance rating scale and a new framework for quarterly

performance conversations between all managers and their direct reports.

A new set of reward plans to drive increased sales and ATV was rolled out for the retail population in EMEIA and the Americas; a

further rollout for Asia is planned for the upcoming year.

A review of our compensation plans for which over a third of our workforce is eligible has been conducted to ensure alignment between the wider workforce and the new Directors '

Remuneration Report (which will be proposed for approval at the 2020 AGM).


Diversity and Inclusion and Employee Relations

The onboarding of a new Director of Diversity and Inclusion has been completed as well as the development of Burberry ' s global Diversity and Inclusion strategy, which was presented to the Board of Directors in March.

An External Advisory Council, comprised of thought leaders from across the diversity and inclusion landscape, as well as an Internal

Diversity and Inclusion Council, comprising Burberry employees, have been established to act as a sounding board for the

implementation of the global Diversity and Inclusion strategy.

The onboarding of a new VP of Employee Relations has seen the refinement of the Employee Relations operating model and a

revision of our core policies and procedures.

The rollout of a new global parental leave policy has seen an increase in the amount of paid leave globally for all employees,

with all new parents receiving 18 weeks ' paid leave and four weeks on reduced hours when they return to work.

The celebration of global events such as World Mental Health Day, International

Women ' s Day and Black History Month (in the USA) saw great participation across our global employee population.



The rollout of the Smarter Working programme, underpinned by Microsoft technology platform and a new flexible working policy, has allowed employees to work more flexibly.

63 employees across the UK, Hong Kong S.A.R. and the UAE have now been trained as qualified mental health first aiders, with

further courses scheduled.

Our Employee Assistance Program is now available to all employees globally, offering a range of services, including individual counselling.




We recognise the value and importance of

successfully delivering our Inspired People strategy and therefore have a low tolerance for risk in this area.


Loss of critical talent/knowledge/unmanageable levels of attrition due to ongoing transition period/change

fatigue and heightened by challenging business conditions.

Failure to build the right capabilities and behaviours in our leadership population.

The long-term impact of the UK ' s withdrawal from the EU on the Group ' s EU workforce.

The impact of the downturn in business performance related to a macro event such as a global health emergency.






IT operations fail to support critical processes across the Group including Retail and Digital as well as Group functions, such as Supply Chain and Finance.

Risk movement and outlook

The impact of this risk has increased, however, the likelihood has reduced due to the progress made in upgrading legacy solutions, which have increased resiliency and security.



All strategic pillars.

Establishment of an IT Portfolio Forum with

Executive representation to support IT investment decisions and oversee delivery of prioritised IT programmes and initiatives.

IT function has been strengthened with clear alignment between the IT teams, the strategic pillars, business functions and operations.

Implementation of Controls to help maintain the continuity of the Group ' s IT systems, including business continuity and IT recovery plans, which would be implemented in the event of a major failure.

A tested Group incident management framework is in place to report, escalate and respond to high impact events.





We adopt a strategy to avoid or mitigate key risks to the disruption of IT operations wherever possible.



• Failure to provide technology platforms that meet customer demands and support innovation could result in failure to deliver the strategy and loss of revenue.

• Failure to provide stable and resilient technology platforms that meet business demands across retail and corporate sites could result in failure to deliver the strategy and negatively impact operations due to poor system performance and/or system outages.




A major incident impacts countries where the Group operates, has its main locations or where its suppliers are located, and significantly interrupts the business. This could be caused by a wide range of events at a country level, including natural catastrophe, pandemic or changes in regulations, through to localised issues, such as fire, terrorism or quality control failures.

Risk movement and outlook

The risk has been increased due to the ongoing COVID-19 pandemic and the impact of longer term repercussions, a more uncertain global economic environment and the potential for key suppliers to face financial difficulty and ongoing political and regulatory changes making it more difficult for the supply chain to source, produce and ship products internationally.



Our Product and Distribution strategic pillars enable us to operate effectively and efficiently, delivering Operational Excellence through continuity of supply of compliant products and services of the highest quality to our customers.

Ensuring our ability to continually execute and operate key sites and factories to develop, manufacture, distribute and sell our products is a key strategic priority.

We have policies and procedures in place designed to ensure the health and safety of our employees and to deal with major incidents, including business continuity and disaster recovery.

The Group continues to evolve its supply chain organisational design to develop its manufacturing base, reducing dependence on key sites and vendors.

A Group incident management framework is in place to ensure that incidents are reported and managed effectively. Across the Group, our

Incident Management Teams managed 16 incidents in the year. The two longest running incidents were related to the Hong Kong S.A.R. disruptions and the COVID-19 pandemic. In both cases, teams worked to mitigate the

impact on our employees, customers and the business. The remainder of these incidents were localised to fire and flood related issues or

interruptions in the regular running of stores, offices and systems.

Our Group Incident Management Team and Regional Incident Management Teams all took part in training and incident management exercises involving large parts of the Group, our customers and media relations function. Our

plans as tested during the year were found to be effective.

Our product suppliers and vendors are subject to a quality control programme, which includes regular site inspections and independent

product testing.

Robust security arrangements are in place across our store network to protect people and products in case of security incidents.

Business continuity plans are in place for our 10 main sites, including our three major distribution centres and our two UK factories. Business continuity plans are being developed for our third factory, Burberry Manifattura in Italy.

The Group ' s key IT systems are protected to prevent and minimise any potential interruption. This includes resilient design and the provision of disaster recovery services to continue operating within pre-agreed times in case of a major incident. Our plans as tested during the year were found to be effective.

Management regularly reviews and manages business continuity and disaster recovery risks, recognising that these plans cannot always ensure the uninterrupted operation of the business, particularly in the short term.

A comprehensive insurance programme is in place to offset the financial consequences of insured events, including fires, flood, natural catastrophes and product liabilities.



We have a low tolerance for risk in this area, particularly with respect to product safety and quality.


Burberry operates three owned factories and a global network of storage and distribution hubs. These face typical property risks, such as fire, flood and terrorism.

Burberry works with several suppliers of luxury goods, which could be difficult to replace quickly. Their loss could interrupt the delivery of core products or a seasonal range.

A serious product quality issue could

result in a product recall.

Socio-political tension, like the gilets jaunes movement in France, can significantly impair local footfall and trade.

A global health emergency impacts a key market, which reduces consumption or significantly impacts the supply chain.




The Group ' s operations are subject to a broad spectrum of national and regional laws as well as regulations in the various jurisdictions in which we operate.

These include product safety, trademarks, competition, data, corporate governance, employment, tax and employee and customer health and safety. Changes to laws and regulations, or a major compliance breach, could have a material impact on the business.

Risk movement and outlook

The relative significance of this risk has increased because of the changing regulatory environment despite the mitigating steps we have taken to ensure compliance.



Compliance with applicable laws and regulations and behaving in accordance with our values as a business underlie all our strategic pillars.

The Group monitors and seeks to continuously improve processes to gain assurance that its licensees, suppliers, franchisees, distributors and agents comply with the Group ' s contractual terms and conditions, its ethical and

business policies, and relevant legislation.

Specialist teams at corporate and regional level, supported by third party specialists where required, are responsible for ensuring the Group's compliance with applicable laws, ethical and business policies and regulations, and that

employees are aware of the polices, laws and regulations relevant to their roles.

Ethical trading, environmental sustainability and community investment matters reported to the Ethics Committee, Risk Committee and the Board.

Assurance processes are in place to monitor compliance in a number of key risk areas, with results being reported to our Risk Committee and Audit Committee.

We have an established framework of policies that aim to drive best practice across our direct and indirect operations, including our Responsible Business Principles and Global Environmental Policy. Policies available at, are owned by senior leadership and are issued to all supply chain partners. Their implementation is monitored on a regular basis.

We have established a Data Privacy Steering Committee to oversee compliance with applicable data legislation.

International tax reform is a key focus of attention with significant developments reported to the Audit Committee.

We have a wide range of global programmes that tackle educational inequality, foster community cohesion and enhance social and economic empowerment.

Rollout of annual mandatory training to all employees and to targeted functions

to ensure awareness and compliance with our policies governing anti-bribery and anti-corruption (ABAC), Market Abuse Regulations, annual conflict declarations, criminal finances, anti-money laundering and privacy.

Our culture and policies encourage employees to speak up and report any issues

without fear of retribution. A global confidential employee helpline is in place in almost all countries where we have retail or corporate locations, and where it is legally permitted. All calls and emails are logged and independently reviewed and followed up. During the year 158 cases were received and the results and

themes are reviewed by the Ethics Committee. No significant issues were identified from these cases during the year.

In accordance with our ABAC policy, annual training is required to be performed. This year the annual e-learning module was rolled out to all corporate staff and manufacturing and retail employees of manager level and above, a total of 3,614 employees. The training reached a 96% completion rate. Any incidents or potential areas of concern are investigated by highly

experienced investigators in our Asset and Profit Protection team and ABAC risks are covered as part of the scope of Internal Audit reviews. During the year there were no ABAC related issues.


In complying with laws and regulations, including customer and employee safety, and bribery and corruption, we have a low tolerance for risk.


• Regulatory non-compliance.

• Failure by the Group or associated third parties to act in an ethical manner consistent with our Code of Conduct and our Responsibility Agenda, for example with regard to model well-being.

• Non-compliance with labour, human rights and environmental standards across our own

operations and extended supply chain could result in financial penalties, disruption in production and reputational damage to our business.

• Failure to comply with GDPR and/or equivalent applicable data protection legislation globally.

• Tax is a complex area where laws and their interpretations are changing regularly. Non-compliance by Burberry and its associated

third parties in this area could result in unexpected tax and financial loss.




Sustained breaches of Burberry ' s intellectual property (IP) rights or allegations of infringement by Burberry pose risk to the brand. Counterfeiting, copyright, trademark and design infringement in the marketplace could reduce demand for genuine Burberry merchandise.

Failure to implement appropriate brand protection controls in connection with our commitment to stop destroying unsaleable finished products could negatively impact the integrity and the luxury positioning of the brand.

Risk movement and outlook

The likelihood of risk has increased in the past year for several reasons, including the increased brand heat under our new creative direction; the frequent launch of new designs and motifs, which may not always be immediately protected, and the potential increase of sales in the parallel market in light of the COVID-19 pandemic.



Protecting the integrity of the brand, safeguarding and elevating its luxury position, complying with applicable laws and regulations and doing the right thing underlie all our

strategic pillars.

The Group ' s global Brand Protection team is responsible for brand protection efforts globally, online and offline.

Where infringements are identified these are addressed through a mixture of criminal, civil and administrative legal action and negotiated settlements.

Trademarks, copyrights and designs are registered globally across all appropriate categories.

The Brand Protection team partners closely with the design and merchandising teams to ensure that our products do not infringe the rights of third parties and to ensure that we have adequate protections in place prior to market entry.

The teams explore new and emerging threats and ways to combat threats.

The team partners regionally with enforcement agencies and our digital partners to minimise the visibility of counterfeit and parallel trade products both online and offline.

We aim to disrupt the flow of counterfeit products by enforcing at source level.

Brand protection controls have been implemented to safeguard the brand in connection with our commitment to stop destroying unsaleable finished products.






We have a low tolerance for risk in protecting the integrity of the brand, asserting our IP rights while ensuring due respect is given to the IP rights of others.


• Counterfeiting, parallel trade, copyright, trademark and design infringement in the marketplace can reduce the demand for genuine Burberry merchandise and impact revenues.

• Unauthorised use of trademarks and other IP, as well as the unauthorised sale of Burberry products and distribution of counterfeit products, damages Burberry's brand image

and profits.

Brand heat as well as sophistication in counterfeiters ' ability to manufacture at pace have increased infringements and counterfeiting of our brand.

New branding may not immediately be protected and we must rely on national laws to secure IP rights, which afford varying degrees of protection and enforcement opportunities depending on the country.

• Allegations from third parties of IP infringement by Burberry could negatively impact Burberry's reputation, result in claims and financial loss through withdrawing infringing products.

• Distribution outside of our authorised network could negatively impact the demand for Burberry products and negatively impact our luxury reputation.



The success of our business over the long term will depend on the social and environmental sustainability of our operations, the resilience of our supply chain and our ability to manage the impact of any potential climate change on our business model and performance.

As the global climate crisis becomes more critical we recognise the importance of addressing long-term sustainability challenges and the potential impacts of climate change on our business, in reputational, operational and financial terms. Failure to implement appropriate cross-functional action plans, incorporating the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) and Science Based Targets initiative, could hinder efforts to mitigate long-term risks and future-proof our business.

Risk movement and outlook

The risk of climate change has increased and will continue to increase incrementally year on year without significant global effort, including our network of suppliers, and adaptation across companies and countries.




Our commitment to being an industry leader in responsible and sustainable luxury underpins our vision to establish ourselves firmly in luxury fashion and deliver sustainable, long-term value.

Physical Risks

To help identify future areas for focus to mitigate climate-related physical risks we completed three scenario analysis workshops,

which assessed long-term environmental, social and technological trends.

In the short term, we are conducting specific analysis of the acute risk of our locations and operations.

We have assessed the climate change risk in our finished goods and raw material supply chain by evaluating the exposure, vulnerability

and readiness of the countries we operate in and where our key supply chain partners are located.

In our own operations and supply chain we continue to use the WWF water risk assessment tool and the Aqueduct Water Risk Atlas to

identify current risks, anticipate potential future strains on water resources, and understand emerging long-term risks.

We use science-based targets to focus our efforts in order to address GHG emissions along our entire value chain. This is described in our Responsibility section (page 67).

We support a number of industry initiatives that address climate change impacts, including the Ellen MacArthur Foundation ' s Make

Fashion Circular Initiative, New Plastics Economy Global Commitment, UN Fashion Industry Charter for Climate Change, The

Fashion Pact and the SFA.

We invest in programmes that help to sustain our industry and supplier communities, specifically initiatives that tackle educational inequality, support social and economic development and community cohesion.

In FY 2019/20, we established a Regeneration Fund to support insetting projects in the supply chain that will reduce the carbon impact of our raw materials and improve biodiversity and local

producer livelihoods.

We continuously engage and educate employees around the topic of climate change through focused events, strategic communications and volunteering opportunities.


Transitional Risks

Through our memberships with various industry bodies, associations (for example, The Climate Group) and external assurance partners, we contribute to consultations and are kept informed of upcoming environmental legislative changes.

Environmental sustainability matters are reported to the Sustainability Steering Group, the Ethics Committee, the Risk Committee and the Board.

Our longstanding responsibility programmes, coupled with our 2022 Responsibility goals, are driving continuous improvements in moving beyond social and environmental compliance.

We identify and explore scarce resources while also developing alternative materials through research and development.

Our target is for 100% of our products to have more than one positive attribute by 2022.

We continue to increase our sustainable product mix, by including recycled content, bio-based materials and more sustainable cotton in our collections. We have also worked directly with cotton growers in the USA to develop a fully traceable organic cotton supply for the future.

In FY 2019/20 we assessed the potential impact of commodity price changes over the medium term.

In FY 2019/20 we introduced our product sustainability messaging to make customers aware of our improved sustainability credentials. We also increased sustainability messaging in brand-related communications.

As part of scenario analysis workshops we assessed long-term technological trends that could significantly impact our business model.

Our IT Innovation team is exploring new systems and ways in which sustainability priorities can be supported by advancements

in technology.

We continue to increase our focus on zero-waste mindset across the business and have a clearly defined waste hierarchy. We have

established a waste baseline and are setting targets and KPIs that will cover operational, manufacturing and finished goods waste as well as packaging. Since FY 2018/19 we have publicly committed to not destroying unsaleable finished products.

Our climate goals are approved by the Science Based Targets initiative (SBTi) and in line with the Paris Agreement goal of reducing carbon levels to keep the global temperature increase under 1.5˚C.

In line with the increased expectations of our stakeholders, we are providing more transparency in our corporate reporting, as well as disclosing a number of Environmental, Social and Governance (ESG) investor indices.




We have a low tolerance for risk, when it comes to protecting the human and environmental resources we all depend on. However, given the long-term nature of some sustainability risks and the level of uncertainty associated with their occurrence and impact, we accept that some risks are inevitable. We therefore

focus on helping to minimise global risks

while building resilience in our operations

and supply chain.


Physical risks


Increased severity of extreme weather events, from floods to droughts, could cause disruption in our supply chain, impact our business model and affect the sourcing of raw materials, as well as the production and distribution of finished goods.


Our industry is sustained by many agricultural

and manufacturing communities around the world. Longer-term shifts in climate patterns

and loss of biodiversity caused by changes in

precipitation patterns, rising mean temperatures and rising sea levels could cause social, economic and operational challenges.

Failure to address and mitigate these risks

could result in resource availability limitations

(for example cotton, leather and cashmere)

and disruptions to key operations.


Transitional Risks

Policy and Legal

Increased regulation and more stringent

environmental standards could impact our business by affecting production costs and

flexibility of operations.


Resource scarcity, coupled with increasing

demand and changes in customer behaviour,

could affect the production, availability, quality

and cost of raw materials.


Substitution and transition costs associated

with implementing new technologies that enable

sustainability and climate change initiatives.


Failure to meet consumer demand regarding sustainability could threaten our relationship with customers, employees, regulators and interest groups, which could impact Group revenues.






Gemma Parsons
Company Secretary
Burberry Group plc


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