LONDON
Luxury brand Burberry reported better than expected same-store sales in its first quarterly report under new CEO Marco Gobbetti, helped by a rebound in Chinese demand and another good performance in its home British market.
Shares in the group, known for its trench coats lined in its camel, red and black check, topped the FTSE 100 index on Wednesday, as analysts said a 4 per cent rise in like-for-like sales was double the expected rate. The stock was up 2.8 per cent at 1,624 pence at 0841 GMT.
Chief Financial Officer Julie Brown said Chinese consumer confidence had rebounded, resulting in stronger growth in mainland China and Hong Kong.
In Europe, Britain led the way, although growth has slowed as the group lapped the fallout from Britain’s vote to leave the European Union last year, she said.
“We continued to see strength in UK domestics and it even rose as we went through the quarter,” Brown said, contrasting with the sombre mood of many mass-market retailers as consumer spending is squeezed by higher prices and subdued wages growth.
“Customers responded positively to our new DK88 bag,” she said. “We continued to have great success with our new tropical gaberdine trench coat, with models such as the Haughton selling out in some geographies.” Gobbetti took over from Christopher Bailey as chief executive this month, charged with strengthening the brand while improving efficiency and boosting the performance of its stores, where it delivers lower sales per square foot than rivals.
Some investors have been unhappy about the pay of executives, including Brown and Bailey, who continues to be Burberry’s creative driving force.
Shareholder Royal London is planning to vote against the company’s remuneration report at its annual shareholder meeting on Thursday.
Brown said questions about pay should be directed to the remuneration committee, but added the group would continue engaging with shareholders.
She also said Burberry would not pursue an option to combine its manufacturing in Yorkshire, north England, in a new facility. “We are taking some time to assess options during the course of the next year or so,” she said.
Burberry reported retail revenue of £478 million ($613 million) for the three months to the end of June.
It said its guidance for full-year pretax profit was unchanged, although exchange rates were forecast to have a 25 million pound adverse impact, an improvement on its previous forecast of a £30 million hit.
Analysts’ average pretax profit forecast was £456 million before Wednesday’s update.
