- Prachi Singh |
Retail sales at Burberry increased 3 percent underlying and 13 percent at reported FX in the first quarter to June 30, 2017. The company’s comparable sales rose 4 percent. Burberry said, timing of store footprint changes in the quarter resulted in lower average space year-on-year, reducing revenue by 1 percent.
Commenting on the first quarter trading, Marco Gobbetti, Burberry’s Chief Executive Officer, said in a media statement: “I am delighted to have started as Burberry CEO. We are pleased with our performance in the first quarter, while mindful of the work still to do. This is a time of great change for Burberry and the wider luxury industry. I look forward to building on the foundations Christopher and the team have put in place and creating new energy to drive growth.”
Review of the first quarter performance
While the company saw mid single-digit percentage growth in Asia Pacific with Mainland China delivering mid-teens percentage growth and Hong Kong continuing to improve its performance, the company said, Korea remained challenging impacted by the macro environment.
Sales in the EMEIA region grew high single-digit with continued strength in the UK, with a deceleration towards the end of the quarter. The company reported weakness in some areas of Continental Europe such as Italy. Burberry said, the Middle East remained challenging, impacted by the macro environment and there was a low single-digit percentage decline in the Americas. Conversion in the US, it said, continued to improve partly benefiting from a successful BPC programme and this partially mitigated the negative footfall trends.
The company’s direct-to-consumer revenue continued its growth with mobile transactions now representing 40 percent of the mix and China revenues more than doubling compared with prior year. Following its soft-launch in the UK last year, the customer app, Burberry said, is now live in five markets.
By product, Burberry said, innovation led growth in all categories with strong performance from tropical gabardine trench in outerwear and the DK88 in accessories.
Expects flat wholesale revenue growth in H1
In FY 2018, Burberry will focus on productivity from its current store footprint therefore it does not expect any material contribution from net new space. Burberry now expects total underlying wholesale revenue in the first half of FY 2018 to be broadly flat compared to 287 million pounds (368 million dollars) reported in the first half of last year. Excluding beauty, the company said, underlying wholesale revenue in H1 2018, is still expected to be broadly unchanged year-on-year at 217million pounds (278 million dollars).
For the second half, Burberry currently expects underlying wholesale revenue, excluding beauty, to be down due to brand control but total underlying licensing revenue for FY 2018 is still expected to be up 20 percent year-on-year including the impact of beauty. FY18 adjusted PBT at constant exchange rates is maintained. At June 30, effective rates, the expected impact of year-on-year exchange rate movements on FY18 reported adjusted PBT is around 25 million pounds (32 million dollars) adverse compared to the company’s previous guidance for 30million pounds (38 million dollars) adverse at April 28, effective rates.