Burberry Sales Miss Estimates as Demand Shrinks in Americas

LONDON-Burberry Group PLC (BRBY.LN) reported Wednesday second-half revenue of 1.61 billion pounds ($2.02 billion), down on an underlying basis, but boosted by foreign exchange gains on a reported basis. I am delighted that Marco and Julie have now joined the business.

The fourth quarter comparable sales rise marks a slight slowdown on the 3% reported in the previous three months, but left overall growth at 3% in the final six months of its year.

Retail sales in the United States, however, were hurt by a strong dollar, which encouraged customers to shop overseas, leading to weaker domestic demand.

"In an uncertain environment, we continue to take action to strengthen the brand and reposition Burberry for growth", Christopher Bailey, chief creative and executive officer, said. "In addition, strategic actions taken to protect brand positioning in the highly promotional USA environment contributed to the decline".

The latter delivered "high single digit growth", meaning retail revenues rose 19 per cent year-on-year when stripping out currency fluctuations, despite a drop in sales in Korea and Hong Kong.

Burberry shares fell as much as 7.1 percent to 1,580 pence in early London trading, the steepest intraday decline since October 18. Burberry added that reflecting the rationalisation of distribution in key markets and distributor de-stocking, beauty revenue declined by about 20 percent underlying.

Burberry saw double-digit percentage growth in EMEIA with positive performance in the United Kingdom and improved trading in Continental Europe, particularly France, while the company said, Middle East remained challenging.

The company's other sources of income - wholesale and licensing - both fell on an underlying basis.

The company said it's maintaining its forecast for adjusted pretax profit.

  • Zachary Reyes