14th Jan 2015 09:44
LONDON (Alliance News) - British luxury fashion retailer Burberry Group PLC Wednesday said retail sales rose 14% year-on-year during the third quarter, with the Americas one of its main growth drivers, but said weaker sales in Hong Kong held back growth in the period.
Burberry said retail revenue came in at GBP604 million for the three months to end-December.
Comparable sales, which takes out the effect of new store openings, were up 8% in the quarter on the year before, which is a slowdown from growth of 12% in the first half of the year. Analysts were expecting growth of around 7% for the quarter.
Burberry said it saw double-digit growth in the Americas and Europe, Middle East, India and Africa and India regions, yet only low-single digit growth in Asia due to weaker sales in Hong Kong, a high-margin market for the company. It said sales were hit by "disruptions in Hong Kong" caused by the so-called "Umbrella Revolution" political protests in the former British colony now part of China.
"Looking ahead, we will bring equal focus to maximising the opportunities of the final quarter - including Lunar New Year - while being mindful of what remains a challenging external environment," said Chief Executive Christopher Bailey in a statement.
Burberry warned in November that it was expecting some downward pressure on its full-year retail/wholesale margin, reflecting the negative impact of exchange rates, a more difficult external environment, and continued investments it is making.
"Since November, there has been a modest improvement from exchange rate movements, but this has been more than offset by, primarily, the slowdown in Hong Kong and the change in the regional sales mix," Burberry said on Wednesday, highlighting that it still expects its margins for the full year to remain under pressure.
Elsewhere in Asia, Burberry said it saw a "robust performance" in mainland China and Korea, growing by a mid to high single-digit percentage.
"By product, the relaunch of heritage rainwear and cashmere scarves drove strong growth, reflecting the intensified focus in these core categories, across design, marketing, merchandising and in-store execution. In fashion, runway-inspired ponchos saw exceptional performance," Burberry said.
The retailer opened five stores during the quarter and closed four. It opened stores in Beverly Hills, Tokyo and Seoul, as well as two concession in Japan ahead of the licence expiry later this year.
Burberry said it expects new store openings to contribute about 5% to total retail revenue growth for the full year, while it still expects wholesale revenue, excluding beauty, to be down by a mid single-digit percentage over the six months to end-March, from the GBP240 million it reported last year. It cited a "more cautious approach" from wholesale customers selling to the European consumer and to Asian travel retail markets.
Burberry shares were down 1.5% at 1,639.00 pence Wednesday morning.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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