Burberry First-Quarter Same-Store Sales Fall Below-Forecast 3%
Restructuring luxury goods maker Burberry Group plc said on Wednesday that first-quarter same-store retail sales fell 3%, better than consensus expectations, as overall sales rose 4%.
Analysts had been expecting same-store sales to decline 5% and the figures will reassure investors as Celine CEO Marco Gobbetti, prepares to take over from Christopher Bailey at the helm of the London company. Bailey will keep the role of chief creative director and also become president, Burberry announced on Monday as it addressed widespread investor criticism about his dual function.
Burberry said on Wednesday total retail revenue was £423 million ($562.5 million), up 4% , with Asia Pacific, excluding Hong Kong and Macau higher. Those islands have been hit by slowing flows of mainland Chinese tourists. Burberry said Asia Pacific, Europe, the Middle East and Africa and the Americas all experienced low single-digit same-store sales declines.
Burberry said it expects a £90 million adjusted profit benefit from the weaker pound in its fiscal 2017 results, up from the £50 million it was expecting when it announced its fiscal 2016 figures. The pound fell to a 31-year low against the dollar in the aftermath of the U.K.'s Brexit vote and was recently trading at $1.3286, up 0.29%.
The £40 million additional benefit compares with Credit Suisse expectations that the pound's weakness could add another £50 million to the bottom line. Writing on Monday the analysts said that Burberry's May restructuring plan, designed to drive revenue growth, boost productivity and achieve at least £100 million in additional cost cuts by the 2019 fiscal year, "could take more time to executive," given the management changes.
"We view this management shakeup as a positive for the longer term but these changes perhaps do not bode well for current trade and the execution of the strategic plan," the analysts noted.
Burberry said on Wednesday it expects wholesale revenue to decline in the six months to September by 10% at constant exchange rates.
Burberry on Tuesday closed down 0.7% at 1,203.00 pence.