14th Nov 2019 08:12
(Alliance News) - Retailer Burberry Group PLC on Thursday affirmed its full-year guidance after reporting a first-half earnings rise, despite uncertainty in Hong Kong.
Burberry shares were up 8.1% in London at 2,226.00 pence, making the stock the top blue-chip performer in early trade on Thursday.
Separately, the fashion house said it will be embarking on a social media-driven retail venture with Chinese conglomerate Tencent Holdings Ltd.
In the six months to September 28, revenue rose by 5.0% to GBP1.28 billion from GBP1.22 billion. Comparable store sales grew 4%, comprising 4% growth in the first quarter which accelerated to 5% in the second.
The company, known for its checked print and trench coats, reported pretax profit increased by 11% to GBP193 million from GBP174 million.
Burberry upped its interim dividend by 2.7% to 11.3 pence per share from 11.0p last year.
The firm reiterated its guidance of "broadly stable revenue" for the full-year. Last year, it generated revenue of GBP2.72 billion.
Chief Executive Marco Gobbetti said: "We are pleased with our performance in the half, as we remain on track to deliver the first phase of our strategy. New product now represents a high proportion of our assortment and the customer response has been positive delivering strong double digit growth.
"We also continued to strengthen momentum around our brand and transform our distribution. We delivered financial results in line with guidance despite the decline in Hong Kong and we confirm our outlook for financial 2020."
Looking ahead, the company said it expects sales in Hong Kong, where there is increased civil disruption, to remain under pressure.
The company also said it now expects its full-year gross margin to be down around 150 basis points, previously guided to a 100 basis point decline, reflecting mix and the disruptions in "higher margin market Hong Kong".
Elsewhere, Burberry said it will team with Chinese technology giant Tencent in a "social retail" venture in China.
Burberry said: "Through this partnership, Burberry and Tencent will pioneer a concept that blends social media and retail to create digital and physical spaces for engaged communities to interact, share and shop."
The social retail outlet will open in Shenzen, a major technology hub.
Gobbetti added: "Social media is becoming such an important part of the luxury customer journey, particularly in the inspiration phase, and retail needs to keep pace with this. Continuing our history of innovation, we wanted to explore the connection between these touchpoints by merging social media and the store experience to reflect the way luxury customers are engaging with brands. China was the obvious place to start as it is one of the leading hubs for innovation."
By Eric Cunha; [email protected]
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