15th Jul 2015 07:28
LONDON (Alliance News) - Burberry Group PLC on Wednesday reported a rise in revenue in the first quarter of its financial year and said profit for the year will be GBP20 million higher than the prior year if exchange rates remain at current levels, although it warned that the increase would be offset by "a more adverse geographic mix".
The fashion retailer said that retail revenue grew 10% to GBP407 million in the three months to June 30, as it experienced double-digit growth in Europe, the Middle East, India and Africa, high single-digit growth in the Americas, but a low single-digit decline in Asia Pacific, hit by a challenging market in Hong Kong.
Burberry said it continues to receive a strong customer response to its heritage trench coats and cashmere scarves, as well as the "emerging key category" of ponchos. It added that digital continued to outperform, with mobile penetration of sales more than tripling compared to the prior year, supported by the investment it made in improved mobile functionality last year.
The company opened five mainline stores and closed three in the quarter and said that net new space in the year will contribute low single-digit percentage growth to total retail revenue, with 15 to 20 mainline store openings and a similar number of closures.
Total wholesale revenue is expected to be broadly unchanged in the first half of the year at constant exchange rates, and excluding beauty is expected to be down by a low single-digit percentage. Wholesale revenue for beauty, however, should grow by 10% to 15% at constant exchange rates in the year.
Burberry said that if exchange rates remain at current levels, profit for retail and wholesale for the full year will be about GBP20 million higher than that achieved the prior year, which is GBP10 million higher than estimated in the guidance it gave during its full-year results in May. However, the retailer does expect this to be offset by "a more adverse geographic mix", particularly from the high margin market of Hong Kong.
In the licensing division, full-year revenue is still expected to decline by about 40% at constant exchange rates, due to the expiry of Japanese licences. But, Burberry expects double-digit percentage growth from the global product licences and about GBP25 million from Japan.
Burberry added that adjusted pretax profit at constant exchange rates will be weighted towards the second half of the year.
"While mindful that the external environment remains challenging, we will continue to focus on growth opportunities across channels, regions and products, with exciting plans for the year ahead," Chief Executive Christopher Bailey said in a statement.
Burberry shares were trading down 1.7% at 1,593.00 pence early Wednesday, one of the worst performers in the FTSE 100.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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