Good morning. And welcome to Burberry’s Full Year 2019 First Quarter Trading Conference Call, which has accompanying slides that are available on the IR section of our Web site. In today’s presentation, I will briefly run through a review of our retail sales growth in Q1, and I will highlight some key operational progress we’ve made. And finally, we’ll turn to the outlook for the remainder of the year. With me this morning is Charlotte Cowley, our Head of Investor Relations, and we’ll be happy to take your questions at the end. So, turning to the first slide and starting with the retail performance in the first quarter. Underlying retail revenue was up 3% at constant exchange rates. Comparable sales grew 3% with strength in Asia-Pac and Americas, partially offset by EMEIA. Space was marginally negative during the period. We continued our strategic investments in key markets with six openings, including the relocation and expansion of our flagship store in Dubai. This in part offset the headwind from seven store closures, including an additional two outlets. For the full year, we continue to expect Space to impact retail sales by minus 1%. We also have an impact from the move to the retail calendar and the adoption of IFRS 15. In aggregate, the two equated to 0.3% negative impact on retail growth. And finally, currency was negative in the quarter as guided with sales of £479 million were unchanged year-on-year at reported exchange rates. Now turning to comparable regional revenue performance on Slide 2. Asia-Pacific grew by a mid-single digit percentage, broadly consistent with the second half last year. Mainland China grew but we saw a marked shift in Chinese spending towards other Asian countries as Chinese tourists took advantage at favorable exchange rates. This benefitted Hong Kong, Korea, and Japan, which all saw good growth across both domestic and tourist clients. EMEIA declined by a low-single digit percentage, and as mentioned negative tourist spending weighed on the performance of both the UK and Continental Europe. The Middle East remained challenging as concerns around the macro environment continued. The Americas delivered high-single digit percentage growth. This ongoing improved momentum that we’ve started to see in the final quarter of last year is encouraging. Footfall has continued its positive trend and we saw good growth from local customers. Turning to strategy on Slide 3. Now, I wanted to share some progress that we have made across the business. As we continue through our transition phase, we are building a strong platform for re-energizing our brand and the execution of our plans remains firmly on track. We’ve talked to you before about the evolving luxury customer base for the whole industry, and we continue to see evidence of this within our own business. Customers are demanding creativity and innovation across product and communication and expecting the highest level of customer service in stores and online. In response to this in the quarter, we have excited clients with pop up stores that celebrate the newest handbags around the globe across Beijing, Dubai, New York, and Seoul. We’ve seen early success for our full merchandizing initiatives in our new collections, which have shown higher link selling and outfitting rate than the total business. In our retail stores, we have rolled out a new digital customer service tool, R World to help our sales associates enhance their engagement and connection with customers frequently and successfully. In the quarter, we saw the revenue driven by appointments up double digits year-on-year. Turning to Communication. We are encouraged by the early results. Under the creative direction of Riccardo Tisci, our recent collaboration with Beyonce achieved the highest ever Instagram story views with 1.1 million. We introduced new creative content across burberry.com and social media channels to support the heritage trench refresh program and new leather goods launches while also ensuring we produce more frequent content with clear, concise messaging. This has contributed to an improvement in our Instagram engagement rate, up 25% from Q4 to Q1. Our digital business continued to excel in all regions with growth led by Asia-Pac. Mobile has now become the largest digital channel in our business. We continue to enhance our omnichannel proposition with a successful go-live in the U.S. and mainland China, supporting store-to-customer shipments in these markets, and EMEIA is scheduled to follow later this year. And our collaboration with Farfetch is performing ahead of our initial expectations. Under operational excellence, the acquisition of a business from one of our longstanding leather partners in Italy is proceeding as planned. In addition to skills and expertise, this acquisition will give us greater control over quality, cost, delivery, and sustainability in this key strategic category. Under Inspired People, a key initiative this quarter was our offsite bringing together our top 250 global leaders. The event focused on emerging teams in our strategic vision and the critical role they will play in delivering. We believe our managers are now better equipped to motivate and engage their teams to execute successfully. Now, turning to our outlook on the next slide. As we look ahead to the remainder of the year, you will see us move further towards a fluid, flexible, and creatively led delivery cycle as we strive to continuously engage consumers with fresh and sometimes unexpected drops of product content and communication. Riccardo is working on a limited edition capsule as part of his debut collection for Burberry, and this will be available in a series of instant drops from September. We’ve announced the collaboration with the legendary British designer, Vivienne Westwood, which will celebrate the iconic design elements from both houses and will launch in a select number of Burberry stores in December. Riccardo’s runway collection in September will be in store from February 2019. And from May 2019, the first delivery of Fall ’19 designed by Riccardo will start to deliver to stores. In terms of the full year 2019 financial guidance, there is no change to our guidance for the broadly stable revenue and operating margin at constant exchange rates. In terms of modeling, in retail, we still expect minus 1% impact from space as we evolve the store network. For wholesale, the low single digit percentage full year decline is anticipated to be more pronounced in the second half. And we remain on track to deliver £100 million accumulative cost savings in full year 2019. As usual, we have updated our currency guidance and the situation has improved due to the weakening of sterling. In terms of revenue, the top line impact is now expected to be marginally positive for the full year. In terms of operating profit, we now expect foreign exchange to be £25 million headwind in full year '19 compared with our previous indications of £40 million at 30th of April spot rates and £30 million to £35 million at early May rates. In terms of saving, the currency effect on profit is weighted towards the first half of the year with the £20 million headwind expected in half one and £5 million headwind in half one. This means on a reported basis, we expect half one operating profit and margin to be lower than the prior year. And finally, we have now commenced the share buyback of £150 million in line with our capital allocation framework. So in conclusion, while it is still early in our execution, we are pleased with the progress we have made in the quarter. We look forward to sharing Riccardo’s debut collection in September, a key milestone for our brand transformation. And while it will take time to achieve our long-term ambitions, we are delivering on all our strategic milestones and feel confident about the future. And with that, Charlotte and I are happy to take any questions.

[Operator Instructions] The first question comes from the line of Edouard Aubin with Morgan Stanley. Please go ahead.

One quick question on retail and one on wholesale, you are basically implicitly guiding for retail like-for-like of roughly 2% to 3% for the year. If we look at the sequencing, in Q2, you are facing your toughest comp of the year on a two- and three-year cumulative basis. So should we expect more or less flattish like-for-like in Q2, if you can just give us a quick indication on the exit rate of Q1 and the beginning of Q2. And then on the wholesale, you reiterated, Julie your guidance for low-single-digit decline. Can you just provide us a quick update on the work in cleaning up the distribution channel in wholesale and particularly in the U.S. please?

Yes. Sure. So clearly, in terms of retail, we've provided all the elements of guidance that we can give. We don’t obviously give guidance by quarter. But what we pointed out, the Q2 in the prior year was our strongest comp because we delivered 4% in the prior year Q1 and 5% in Q2, so we are up against the strongest comp, but we wouldn’t obviously give quarterly guidance on retail numbers. In terms of wholesale, we are progressing very well with the negotiations with wholesalers both in the U.S. and in EMEIA. We’ve guided a low-single-digit decline for the full year; however, it's definitely going to be more pronounced in the second part of the year just because of the phasing of the contracts and the buy through the May and November market. The discussions with them are going extremely well and we've had very good engagement with the wholesalers. As you know, our ambition is to ensure the brand is appropriately positioned in those department stores. And in some cases, we are not in an appropriate location at the moment because of the old Brit heritage. So this will take some time to resolve completely, but the early signs are very, very positive. And we've actually had improvement in luxury accounts, both in the US and in EMEIA, which has been very positive.

Next question comes from the line of Helen Brand with UBS. Please go ahead.

A few questions from me, firstly, can you just give a little bit more detail on the new strategy around more frequent product drops. So how often should we expect these and do you plan to step up the number of collaborations through next year? And secondly, on the quarter specifically, can you give us the breakdown on ASP versus volume? And then finally as a follow up from this, could you just confirm any pricing actions you've taken since the start of the calendar year by region? And do you plan to follow the 5% price cut in China taken by some of your peers? Thanks.

Sure, if I take the first two and Charlotte can take the pricing one in terms of changes of pricing actions. So in terms of product drops, we have now got a new model for engaging with customers. And as we reported yesterday, Riccardo is now working on a limited edition capsule as part of his debut collection for Burberry. And this will be available in a series of instant drops in September. And as you’ve also seen, we also see collaborations as a way of working, going forward. We’ve just recently announced what we see as a very exciting collaboration with an iconic British designer, Vivienne Westwood, and this will be in our stores from December. So the model now is to be more fluid and have it to be creatively led, a delivery cycle that's creatively led, and is a new way really of conversing with customers across product, communication and the experience. So this will result now in Burberry delivering frequent drops of fresh product really to engage our consumers throughout the year, and to be honest, to surprise them also throughout the year. So what we'll be doing is we'll be announcing further details in advance of the Burberry show, which is obviously going to take place on the 17th of September. It's just a new way of engaging with consumers. Taking your second question, Helen, about the quarter, ASP and volume, the quarter benefitted from a combination of both. So we've had an improvement in volume and again, we've had an improvement in traffic. And also we've had a benefit -- a marginal benefit coming through AUR which again is part of the strategy. The region, which is probably shown there to the greatest degree is Americas where we're seeing considerable uptick in performance in Americas, and that's seeing the benefit of traffic. It's also seeing the benefit of conversion and an improvement in AUR. So we're very pleased with the early signs that we're seeing at this stage. But again, we'd emphasize that these things take time, implementing the strategy will take some time. Charlotte, on prices?

So on pricing, we made a few small tweaks to pricing globally, but nothing significant in terms of changing big like-for-like price increases. It was more just to realign that global pricing architecture. In terms in China, in particular, we’ll clearly watch and see how things develop, how the business with -- other companies with big business in China, it’s pleasing to see a policy that should benefit China's consumers, but nothing to update you on today, Helen.

The next question comes from the line of Louise Singlehurst with Goldman Sachs. Please go ahead.

Just in terms of Asia-Pac, we’re obviously, all trying to follow all the news into what’s going in that market. I know to Edouard's point, you're not going to probably give us the exit rate. But can you just tell us anything that you spotted particularly Mainland China versus Hong Kong. I know you touched on it briefly in the commentary. Secondly, just following up on the collaboration, when we’ll see these launches are we going to expect a mix of more local as well as global, or do you plan to launch small quantities but on a global basis and talk about the distribution there? And then just finally, if you could just confirm that you’re happy with consensus EBIT. I see on your Web site, very helpfully at £441 million for this year. Thank you.

So in relation to the trend in the quarter, first of all, if we look at the Chinese, there was absolutely no change in the Chinese as a nationality trend through the quarter. So some people have been flagging, did it change in the final month? No, in the case of Burberry, there was no change in the trend. Probably important to say when we look at Mainland China that we did shorten our markdown period by approximately a week, but it still had no impact on the overall trend. So I know the market is somewhat concerned about this as a general industry point, but we’re picking up absolutely nothing in our numbers. We’re aware of the macro environment and we obviously look at that data, but our end numbers are not projecting any change as we work away through those months. In terms of the other countries within Asia, we definitely had an impact. When we look at Chinese and we look at Mainland China, we definitely had an impact through tourists, or the Chinese moving out of Mainland China into other countries in Asia. We saw an uptick in Hong Kong. We saw an uptick in Korea. And we saw an uptick in Japan, so all of those three countries were benefitted; having said that, we also had domestic growth in all of those three countries as well as the traveling Chinese. Turning to your second quarter about the collaborations, we’ve had -- it is part of our model. Going forward Riccardo is really excited about the collaboration with Vivienne Westwood. It will be part of our model, going forward, to engage in collaborations to engage the consumer. In terms of the distribution of those collaborations is going vary considerably I think. In the case of Vivienne, it will be select stores. But it’s going to -- I mean, the idea of doing is to be innovative is to be creative and therefore, it’s not something like not the mathematical model at all it’s all about creatively. And we will disclose these as and when we’re ready, but we want to surprise people as well.

And just in terms of consensus, yes, you’re right. So the adjusted EBIT was £441 million this morning. And from what we can see, a lot of people had already updated almost run their FX model, so the FX in that was at about £25 million that we’ve guided to to-date, so we’re not expecting to see any real change in that number based on what we said today.

[Operator Instructions] Next question comes from the line of Thomas Chauvet with Citi. Please go ahead.

Three questions please, the first one on your upcoming Spring/Summer ’19 Collection and then the subsequent Autumn/Winter. How quickly do you think you’ll be able to roll out the collection in all your points of sales and remove at the same time the old collection? And then two quick one on the limited edition products and the collaboration. Firstly, are you as a result of this strategy, expecting a gradual increase in ASP in seasonal product as opposed perhaps to carry over items where you seem to suggest there will be limited pricing from here, particularly on trench coats? And secondly, once the collections are in the store, are you expecting a gradual change in the proportion of carry-over versus seasonal items? And can you perhaps remind us on Christopher Bailey's last collection, what was the share of seasonal versus evergreen products? Thank you.

So in terms of the transition to Spring/Summer of ’19, the main collection in relation to that, we’d expect it to be starting to go into the store around the May period. But I think it’s also just important to say that the model that we’re adopting is changing to be -- have the greater frequency and more innovation rather than very large scale deliveries at certain days. So there is a change in the way that we’re upgrading it. In terms of what we’ve commented on before though is we would expect Riccardo’s collections and work to be really making a big impact on our stores from May next year that is going to be the big transition period. And during this time even now actually and we talked about it in the year end results, we’re obviously transitioning from one design to another. And we look in fact weekly monthly at the selling rates of all of those items, so that we can judge any necessary provisions. And as of course you saw us take those provisions at the end of last year. So nothing to update you on that, it’s something that we will work through. It’s including in our guidance and obviously it’s managing the business. In terms of the limited capital and the collaborations and the overall impact on ASP./ as a part of our strategy as you know, we’ve looked at every single product category that we operate in. And we’ve looked at how we compare with peers. And the important thing for us is to deliver perceptible value to our consumers. So in some cases, we will see improvements in ASP. We’ve mentioned a few of those in terms of the leather range, because we’re elevating the leather goods range. And also we talked about when we did the strategy the polo shirts and that taking effect. So there will be some elements of ASP improvement and we’re seeing signs of that already coming through in the quarter, but it obviously will become more pronounced as we go through the different seasons. I think just in terms of the final question was around the season in store versus others. And we’re obviously not going to comment really anymore on the fashion versus retail element, because the whole strategy is to move more towards fashion. So what we would say though is the fashion component of our business is performing a lot more strongly than the old replen model. But going forward, we're not really thinking about it in this way anymore, it’s all about moving towards fashion, innovation, creatively lead business.

Next question comes from line of Rogerio Fujimori with RBC Capital Markets.

I think, I have a question -- some questions on the handbag. I think you've flagged the Belt Bag had a promising start. I was just wondering if you could talk about how the overall category perform, and also including how the some of the most important other lines are performing. How bags are performing versus the rest of accessories? And then finally, I think you articulated that AUR in bags is expected to increase overtime with a greater penetration in the 1,000 to 2,000 U.S. segments. So how -- what was the progress on the AUR front in bags in the quarter? Thank you.

So if I take the bags generally in terms of how we're doing with specific ranges, and Charlotte can probably take up on the AUR front. So in terms of bags, we're very encouraged by the new bags that we've launched. So in the period, the new ones that are coming in, Belt Bag obviously, we launched in the previous quarter and the D-Ring has been recently launched. Both of these are showing strong momentum. The Belt Bag is now the number four bag in the quarter it’s been very strong performance in terms of that, and in the full price category it's even higher than that. And we've also had a very good launch in the D-Ring, although obviously, it's early days. But the most important thing with regard to the bag range, it's all about building out the bag architecture, which will take a number of seasons for us to be able to do that, an encouraging start but these things do take some degree of time. In terms of the -- you asked about the rest of accessories. So accessories performed reasonably well this quarter. The reason you don’t see the results coming through in the bag range overall so far is because we've also got some of the older styles starting to -- the growth rates starting to slow. So basically good news with the new bags for some of the older style is starting to slow in the bag range, and it's all about building out the bag architecture.

And then just in terms of pricing, I mean those three bags that we've seen launch the Belt, the Bucket and the D-Ring they're all north of £1,200 in terms of pricing. The medium Belt is at £1,590, the Bucket is £1,350, and the D-Ring is at £1,290. So absolute to the AUR of bags, you can see that those newer bags are at that higher price point.

And just a quick follow-up on trench coats. Have trench coats outperformed the other categories in the quarter?

Yes. We've seen a good response. In particular, we've seen a very good response with tropical gabardine, which has been very popular in Asia. And obviously linked to that, we've also had success in the Car Coat. The heritage trench re-launch that we embarked on at the beginning of this quarter, we've only launched it so far in 18 stores but we've had good initial signs from that. And we're actually developing now new color ways in response to the response we've had in certain parts as the range. In particular, women's and in particular the honey color has been extremely popular. So we'll have a lot more to say about that I think when we come to the half year results when we will have rolled it out further.

Next question comes from the line of Melanie Flouquet with JP Morgan. Please go ahead.

My first question is regarding the Chinese customer base in total. Can you confirm or what growth rate it had compared to the mid-single digit of the previous quarters? And can you comment on what would have driven any changes? My second question is on the average earning price that you mention is up. Is that a good category in total isn't outperforming nor the replenishment heritage trench coat. How is the average selling price going up, what is driving the average selling price up? My quick question is on the heritage trench coat. When would you expect this to have a strategic impact on your like-for-like -- what is the front that we should expect on this. And my very last question is on the polo shirts. There were indications that you might want to somewhat reduce your exposure to polo shirts moving forward. And I expect that's part of the wholesale pressure. But can you help us understand how far you are and what timing we should expect from this and the weight of that category? Thank you.

So I think I'll share these with Charlotte. So I'll take the Chinese consumer one and then maybe Charlotte can take ASP and heritage, and then I'll come back on the polo. So just in terms of the Chinese consumer, what we're seeing with the Chinese consumer globally is in Q4. Well, starting off actually in terms of the history, Q3 it was relatively flat last year. Q4, we had a mid single digit growth. Q1, we've had a low single digit growth overall in the Chinese consumer. What we've found is that they have been shopping more in Asia. So in mainland China, less so, it was a low single digit positive, but there's been more shopping in Asia. In particular, we've had a benefit coming through in Hong Kong, Japan and Korea. When you compare it with competitors, we have lower penetration levels, as you know, Melanie, in both Japan and Korea, at this stage, Korea just in terms of the distribution of domestic, so retail versus wholesale business is impacting this. So generally speaking, no change to the overall trend that we've seen in the months in the quarter, January, February, March is very consistent trend overall. So I think that addresses the Chinese consumer. If we then move to the ASP increase in leather goods…

So actually when we look, we're seeing consumers generally trade up within categories, Melanie. So that's the biggest driver of why the AUR has been going up in the piece rather than thinking about individual categories weighing up or down, it’s actually within categories, consumers are trading up through the price point. And then on the trench, we're still quite -- still relatively early in the rollout in terms of phasing it through -- those stores are in at the moment. I'd encourage you not to over think it, it is a refresh. As Julie said, one of the most popular styles is the very classic -- I think it's the Kensington Honey for women’s. So I wouldn't over think the modeling perspective of that, but clearly, we'll have a much better view we we’re able to talk to you in November, because we should be quite further through this roll out by then.

So we did a re-launch of the core polo. Obviously it’s a higher level material and product. The entry price is at 180 level versus the 145 that we talked about previously, so we've seen change in that. In terms of the polo shirt performance since the delivery, since we launched in May, we’ve seen very good traction. The new Hartford core polo has been performing extremely well with an improved rate of sales like-for-like options compared with the old Oxford version, so that’s I think a good news. What I would draw your attention to there in terms of changing the product mix is really impacting the product in wholesale is really important part of our strategy. So our wholesalers would tend to take certain parts of our range, and it wasn’t representing our full range, the full Burberry offering in wholesale in the same way as retail. So the important thing with regard to the range is to increase the wholesalers to take the Burberry offerings so that we’re representing our product equally in both the retail and wholesale network.

Can I have just a quick follow-up on China, on the Mainland Chinese? I understand that your geographic dynamics didn’t help you very much for Korea and Japan where you don’t have the big exposure to tourist, to Chinese tourist. So that was already the case in the last quarter. So what changed, what created the deceleration, or should we not -- was it just Chinese New Year helped the mid single digits and this is just a renormalization?

I think it -- I think it’ll also to do with currency and it was also do with the fact that in Mainland China, we reduced the sales period by a week. This had an impact in Mainland China probably ourselves compared with some of the competitors.

Next question comes from the line of Warwick Okines with Deutsche Bank. Please go ahead.

Two quick questions, firstly another one on Asia I am afraid. In your commentary, Julie, you said that Q1 Asia-Pac trends were broadly in line with the second half. Does that mean that was -- the growth rate was a little slower than in Q4? And secondly on operating profits in your comments for the first half, can you give some comments on first half gross margins? I know you don’t like to comment too much about. And I am just wondering whether because of the currency impact, the cost of goods line maybe the gross margin impact will be bigger than the operating margin impact? Thanks.

Your question on the Asian trends, Warwick, this is just to clarify, was it Asia or was it Chinese?

Yes, Asia-Pac region, where the growth in Q4 -- little bit slower than Q4?

So in terms of Asia, Asia as a region overall, there was actually very little difference, it was practically the same number. So in both Q4 and Q1 2019, we basically had the same growth rate, very, very similar. In terms of the gross margin, as you know currency as a headwind and we will have impact on the gross margin -- on the operating margin in terms of currency. I think we’ve mentioned the impact on the margin in the first half is going to be more pronounced but we’re obviously not giving absolute pinpoint guidance on the overall impact. It was going to be more negative in the first half, both growth and operating.

But you can’t say whether you think the gross impacts will be bigger than the operating margin impacts in H1?

It’s not going to be materially different, but we don’t want to give pinpoint accurate numbers on it.

Next question comes from the line of Charmaine Yap with Redburn. Please go ahead.

I have two questions the first one will be on Farfetch. Can you please give a little bit of comment in terms of what has surprised you given it is outperforming your expectations? And the second one just on SKUs, did you need to do any reduction in this quarter, or do you plan to do anymore or is that part of the exercise now broadly? Thank you.

So in terms of Farfetch, it is still a small part of our business but we are delighted with the early uptake in Farfetch. It’s being really encouraging we’ve now got exposure to 150 countries whereas Burberry previously was exposed to burberry.com, to about 4

4. And the early signs versus our own plan, which obviously we wouldn’t be able to disclose, very, very positive. And Farfetch also collect data in terms of the partners they work for and that also come out very, very well for Burberry. In terms of the SKUs, we’ve had a major change in the SKUs since we’ve moved to from three labels to one. So just to give you a little bit of detail on that, we’ve actually had 35% reduction in SKUs since we move from the three labels and this has obviously been over the course of a number of years. We’re continuing to put pressure on options. The idea is that we’re able -- by having actually fewer options and I guess less complexity, the innovation in our stores shows more clearly. And that’s been the major drive that we’ve had to be able to show the innovation more clearly in our stores.

This concludes our question-and-answer session. I would like to turn the conference back over to Julie Brown for any closing remarks.