Burberry earnings on track but sales falter
● Like-for-like growth falls shy of City hopes as UK sales cool
Luxury fashion house Burberry yesterday revealed that group likefor-like store sales rose by a weaker-than-expected 2 per cent and fell in the UK over the festive quarter.
The trench-coat maker said comparable sales in the UK fell by a “high single-digit percentage” in the three months to 31 December as it failed to match the previous year’s impressive performance, when sales surged 40 per cent thanks to a boost from tourist spend.
New chief executive Marco Gobbetti insisted the firm was making “good progress” on revamp plans, despite overall retail revenues falling 2 per cent on a reported basis to £719 million for the crucial Christmas quarter. The like-for-like sales performance fell short of City expectations for around 3 per cent growth. But Burberry said it was on track to meet full-year profit forecasts.
The UK sales decline comes as a blow after last year’s soaring trade thanks to the Brexit-hit pound attracting luxury overseas shoppers.
Gobbetti said: “We are making good progress embedding our strategic vision into the organisation and remain on track to meet our full-year profit target.
“We are building on strong foundations and are fully focused on the successful delivery of our multi-year plan to position Burberry firmly in luxury and deliver long-term sustainable value.”
The trading update comes after the recently appointed boss sparked a shares slide in November as he unveiled a strategic overhaul that will see the group focus solely on highend luxury shoppers.
Commenting on yesterday’s figures, Steve Clayton of Hargreaves Lansdown said: “The investment case at Burberry is more about the transformation plans that new CEO Marco Gobbetti is pushing forward.
“They are designed to push the brand into the upper echelons of the luxury sector, where margins are highest and returns more reliable. Progress on this front is said to be strong, but with returns unlikely to be visible in the P&L [profit and loss] account for some time, investors have to take Mr Gobbetti on trust.”
“We are building on strong foundations and are fully focused on the successful delivery of our multiyear plan”
MARCO GOBBETTI
Burberry CEO