14th Apr 2016 06:15
LONDON (Alliance News) - Luxury goods retailer Burberry Group PLC on Thursday warned of further challenges in its current financial year as sales declined in the second half.
Burberry said total sales in the six months to the end of March fell to GBP1.41 billion from GBP1.42 billion a year earlier. Underlying constant currency retail revenue was flat year-on-year in the half, while wholesale revenue fell 1.0% and licensing revenue fell in line with its expectations amid reductions to licensing income in Japan.
Like-for-like sales for the second half fell 2.0%, with a deterioration in the fourth quarter when like-for-like sales declined 5.0% year-on-year, having been flat in the third quarter.
The group said growth continued in mainland China, Korea and Japan, but Hong Kong and Macau both proved weak in the second half, while sales to travelling customers in Europe declined. Domestic demand in the US also remained uneven in the half, Burberry said.
Burberry said the outlook for the current financial year, to the end of March 2017, looks challenging. Wholesale revenue is expected to fall further in the first half due to tighter inventory controls among US customers and cautious ordering in other regions, while Japanese licensing revenue will continue to decline as licences expire.
Burberry added underlying cost inflation pressures on the business remain strong, though some of this will be offset by foreign exchange benefits based on current rates.
"In an external environment that remains challenging for luxury, we continue to focus on reducing discretionary costs and are making good progress with developing enhanced future productivity and efficiency plans," said Burberry Chief Executive Christopher Bailey.
Burberry said it will release its full financial year results in May.
By Sam Unsted; [email protected]; @SamUAtAlliance
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