GUS to float Burberry by June

Reported sales at Burberry in the second half were 9% above last year and 5% up on an underlying basis. This was despite the impact of September 11 that adversely affected many luxury goods companies. The flotation of 25 per cent of luxury brand Burberry is scheduled for June.

Retail sales in the second half were slightly up on an underlying basis compared to the same period last year, with a resilient performance from the US. Following new store openings in Beverly Hills and Soho, New York during the second half, a further ten new and replacement stores are planned to open in the current financial year. These include flagship stores in New York, Knightsbridge and Barcelona.

With the Spring/Summer order book now substantially delivered, underlying growth of 6% in the second half in Burberry's Wholesale operations was in line with previous indications. The Wholesale order book for Autumn/Winter 2002 to date suggests that sales should be broadly in line with those of a year ago. Within this, sluggish demand from travel-related clients and the Spanish domestic market is being offset by strong demand in the US.

Royalty revenue in the second half was 10% ahead at constant exchange rates, reflecting double-digit volume growth in Japan.

In March 2002, Burberry signed an agreement to acquire its Korean distribution business. It expects to complete this acquisition in July 2002. The initial cost will be about £25m and the deal is expected to add approximately £5m to operating profit in its first full financial year. With this agreement, Burberry has now taken direct control of the distribution of its core products in all key international markets, with the exception of Japan where its renewed licensing arrangements are adding significantly to profits.

"GUS has completed another successful year, with a particularly strong performance from Argos Retail Group. This has been despite difficult trading conditions in some of our markets. We are looking forward to the coming year with confidence."

Experian
Experian's total worldwide sales for the second half increased by 5%.

FARES, the real estate information joint venture, had another strong half, benefiting from the strength of the re-mortgage market. Sales of this associate are not included in Experian's revenues.

Argos Retail Group
Against a background of good consumer demand, Argos' strong performance continued with its Spring/Summer catalogue launched in January. For the second half, sales at Argos, excluding Argos Additions and jungle.com, increased by 17% and by 13% on a like-for-like basis over the same period last year. Sales were particularly strong in consumer electronics, electricals, furniture and toys. Gross margins remained firm.

Reality
Sales to external customers were marginally up in the second half. Core logistics sales to third parties were ahead by over 10%.

16-4-2002
www.gus.co.uk

GUS reveals increase in profits

Retailer GUS Plc reported a slightly bigger-than-expected rise in interim pre-tax profits and said sales were returning to normal. The company sounded alarm bells last month when it revealed that sales at its luxury goods brand Burberry and the US arm of its biggest contributor to profit, information unit Experian, had suffered badly in the aftermath of September 11.

For October the sales of Experian North America in dollar terms were five per cent above those of last year. Although Burberry's retail sales since 30 September are below last year's levels, the trend is improving. Profits were driven by a strong performance from the Argos retail chain of catalogue stores and designer label Burberry, which was still on track for a partial float by June.

GUS reminded investors that its capital spending in the current year will be up to £100m higher than the £268m last year as it restructures the supply chain at Argos, invests in new Burberry stores and builds a new UK data centre for Experian. The stock has outperformed UK retail sector peers over the last two years on the success of Argos and Burberry.

Highlights
- Profit before amortisation of goodwill, exceptional items and taxation up 11%: £206m (2000: £187m)
- Earnings per share before amortisation of goodwill and exceptional items up 10%: 15.5p (2000: 14.1p)
- Dividend up 5% to 6.5p (2000: 6.2p)
- Experian: sales and profits grew in first half, with North America profits unchanged overall despite disruption in September
- Argos Retail Group: sales up 9%; profits up 13%; excellent performance from Argos with 13% like-for-like sales growth
- Reality: further efficiency and service level improvements; continues to win third party contracts
- Burberry: sales up by more than 30%; profits up by more than 50%; more new stores, wholesale accounts and strong growth in Japan

Sir Victor Blank, Chairman of GUS, commented: “The Group’s performance in the first half reflects the strengths of our major businesses. Our continued growth is a great credit to the GUS team at all levels, but I would particularly like to pay tribute to our colleagues in the United States, who have recently been working with tremendous courage in very difficult circumstances.”

John Peace, Chief Executive of GUS, commented: “GUS has delivered strong results across the Group in this first half, with encouraging progress in trading at Burberry and Experian North America since the 11 September terrorist attacks.”

GROUP RESULTS
In the six months to 30 September 2001, sales grew by 8% to £2,857m. Group profit before amortisation of goodwill, exceptional items and taxation was £206.2m, compared to a restated £186.5m in the same period last year. This year’s result was before an exceptional charge of £26.0m (2000: £26.1m). This charge covered restructuring costs in Argos Retail Group and Reality (£16.3m), in line with expectations, and a loss on sale of businesses and investments (£9.7m).

The Group’s effective tax rate (based on profit before amortisation of goodwill and loss on sale of businesses) was 24.2%. Earnings per share before amortisation of goodwill and exceptional items were 15.5p (2000: 14.1p). The Board has announced an interim dividend of 6.5p (2000: 6.2p).

CHIEF EXECUTIVE’S REVIEW
The first six months of the current financial year have seen further good progress at GUS. Sales rose by 8%, with profit before amortisation, exceptional items and taxation up 11%. All our major businesses increased their operating profit. We continue to reposition our businesses for growth by investment and corporate developments.

Investment
Our 11% growth in profit before tax was after significant revenue investment in our existing businesses, as well as new initiatives such as the Argos store card, Argos Additions and e-commerce related ventures in gusco.com. As previously announced, capital expenditure in the current financial year will be up to £100m higher than in 2001 (£268m). Major projects include the supply chain programme at Argos, a new UK data centre and buildings for Experian and new stores for Burberry. Cash will also be invested in the build-up of the debtor book for the Argos store card, with the loan book estimated to be approximately £100m at March 2002. Management teams at all levels have been further strengthened across the Group, especially at Experian North America and Burberry. Tom O’Neill, previously at LVMH, joined Burberry as President on 1 November 2001. Reporting to Rose Marie Bravo, he will initially have management responsibility for its Asian operations.

Corporate developments
As part of its drive to take a greater share of the value chain, Burberry has secured an agreement to bring much of its Asian licence and distribution arrangements outside Japan fully in-house with effect from 1 January 2002. It remains the Group’s intention to arrange a partial IPO for Burberry by June 2002, subject to market conditions. We have continued to dispose of non-core businesses, such as our Swiss home shopping activities and our small UK stationery and printing interests. We have also made further small in-fill acquisitions in Experian to strengthen its product offering. These include companies in e-mail distribution, German account processing and French cheque processing.

Sales performance since 30 September
Given the uncertainty about the impact of the terrorist activity and anthrax problems on the performance of Experian North America and Burberry in particular, we are providing an update to investors on trading since 30 September in these two businesses in these unusual circumstances. For the month of October, the sales of Experian North America in dollar terms were 5% above those of last year (4% excluding acquisitions). We anticipate a further month of progress in November. For Burberry, Wholesale deliveries for Autumn/Winter 2001 were virtually unaffected. With the Spring/Summer 2002 order book now well advanced, orders to date indicate that single digit sales growth overall should be achievable, on top of the strong growth in recent seasons. Although Burberry’s retail sales since 30 September are below last year’s levels, the trend has shown an improvement since the period from 11 to 30 September.
29-11-2001
www.gus.co.uk