- Prachi Singh |
In its preliminary results statement for the year ending March 31, 2018, Burberry has reported revenue growth of 2 percent at CER and reported, excluding beauty wholesale revenue. The company said that the revenues growth was led by retail, with comparable store sales up 3 percent. Total revenue of 2,733 million pounds (3,693 million dollars), declined 1 percent at CER and reported. Adjusted operating profit of 467 million pounds (631.2 million dollars), rose 5 percent at CER and 2 percent reported.
“In a year of transition, we are pleased with our performance as we began to execute our strategy. While the task of transforming Burberry is still before us, the first steps we implemented to re-energise our brand are showing promising early signs. With Riccardo Tisci now on board and a strong leadership team in place, we are excited about the year ahead,” said Marco Gobbetti, Burberry’s Chief Executive Officer in a statement.
Financial highlights of Burberry’s results
Adjusted operating margin was up 110bps at CER and 50bps reported to 17.1 percent. The company’s reported operating profit of 410 million pounds (554.3 million dollars), increased 4 percent after adjusting operating items of 57 million pounds (77 million dollars) relating to restructuring. Adjusted diluted EPS was 82.1p, up 10 percent at CER and 6 percent reported supported by the repurchase of 20million shares and a 70bps reduction in the effective tax rate. Reported diluted EPS of 68.4p rose 5 percent.
Revenues in Asia Pacific increased mid-single digit with stronger tourist trends in the second half. Mainland China, Burberry said, delivered high single digit percentage growth, slowing to mid-single digits in the second half due to the annualisation of strong prior year trends. Hong Kong improved through the year, delivering high single digit percentage growth in the second half, while Korea declined but showed improvement in the second half.
In EMEIA, revenues were broadly stable year-on-year with a decline in the second half with the annualisation of exceptional performance of the UK in the prior year. The UK delivered low single digit percentage growth, with growth in the first half offset by a decline in the second. Continental Europe declined marginally with tourist spend softer in the second half and The Middle East remained challenging, impacted by the macro-environment. Sales in Americas rose low single digit with an improved performance in the second half.
Tops, skirts and trousers segments gain momentum in H2
The company added that mainline store customers responded positively to seasonal updates and innovation. A more complete wardrobe offer and full look merchandising drove strength in tops, skirts and trousers in the second half. Innovation in core categories such as the car coat and tropical gabardine performed well - Continued strength in small leather goods and new handbag launches started from spring 2018.
The company closed 20 stores including 12 mainline, two concessions and six outlets during the year as a part of the evolution of store network. Closures weighted towards the end of the year with seven in the final week of the year.
Licensing benefits from beauty, wholesales declines
Direct-to-consumer continued to deliver good growth with particular strength in Asia. Mobile transactions represented 40 percent of direct-to-consumer revenue. Burberry also announced a collaboration with Farfetch, extending its reach to more customers and over 150 countries.
Excluding Beauty, wholesale revenue was unchanged at CER but rose 2 percent reported due to higher in-season orders. Growth in Asia Pacific was offset by a high single digit percentage decline in the US. In October, beauty transitioned to a strategic partnership with Coty, moving from a wholesale to licensed business model. Reflecting this change in operation in the second half, Burberry added, full year total wholesale revenue declined by 16 percent at CER, down 14 percent reported).
Licensing revenue of 30 million pounds (40.5 million dollars), increased 21 percent at CER and reported, benefiting from beauty transitioning from a wholesale to licensed business model, while other royalties declined.