14th Jan 2016 10:21
LONDON (Alliance News) - Luxury goods retailer Burberry Group PLC on Thursday said like-for-like sales were flat in the third quarter of its financial year, a better performance than in the second quarter, as its key market of mainland China returned to growth.
The signs of health pushed Burberry shares higher, up 1.1% to 1,124.00 pence mid-morning to sit among the best performers in a predominantly lower FTSE 100.
The blue-chip British heritage brand, known for its scarves and trench coats, said its retail revenue for the quarter was GBP603.0 million. Retail revenue was flat on a like-for-like basis, an improvement on the 4.0% decline seen in the second quarter. Total retail revenue was up 1.0% in constant currencies.
The group saw an improvement in its Asia Pacific business. Though Hong Kong and Macau remained weak, mainland China returned to growth. Burberry shares have suffered in recent months from concerns about a slowdown in sales in China and Hong Kong, two key markets for Burberry.
Europe, Middle East and Africa sales increased in the quarter on a like-for-like basis, with good performances in Italy and Spain offsetting a slowing French market. Americas like-for-like sales grew marginally, Burberry said, with a recovery in sales to US domestic consumers but continued weakness in sales to tourists.
Burberry said its profit expectations for the full year remained unchanged, as cost-cutting measures have helped to offset its slowing sales growth. It added it will accelerate its cost-cutting plans in order to maintain its margins within a difficult environment and said it will review how to improve its organic growth opportunities.
The luxury label has been hit in the past year by a slowdown in China and the impact this has had on demand for its products in the country, as well as in Hong Kong and Macau. As sales in China have weakened, Burberry has not benefited from sales to those customers as tourists in Japan, as it has a relatively low exposure in Japan. In addition, subdued sales in the US and UK have eaten into its performance, while a better performance in Europe has been offset by the weak euro.
The review by Burberry is likely to focus on addressing these issues and on cutting its underlying costs, amid an uncertain environment for the luxury goods sector. More details on its plans will come when Burberry publishes its results for the year to the end March in May.
"In a tougher environment than expected, our sustained focus on growth and cost control drove a number of positive results over the quarter, including the outperformance of digital and a return to growth in mainland China," said Christopher Bailey, Burberry's chief executive and chief creative officer.
"The outlook for our sector remains uncertain as the consumer and environment evolve. However, we are anticipating and responding to these changes through an intense focus on new growth opportunities and the acceleration of our productivity and efficiency agenda," Bailey added.
By Sam Unsted; [email protected]; @SamUAtAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
Related Shares:
Burberry