- Prachi Singh |
At 407 million pounds (637.1 million dollars), retail sales in the first quarter at Burberry, increased by 8 percent underlying and 10 percent at reported FX. Of this 8 percent underlying growth, comparable sales growth was 6 percent, with the balance from new space.
By region, there was double-digit percentage comparable sales growth in EMEIA, with strength from the travelling luxury customer in France, Italy and Spain in particular. The Americas delivered high single-digit percentage comparable growth, with footfall recovering through the quarter after a soft start. Asia Pacific experienced a low single-digit percentage comparable decline, impacted by the continued challenging environment in Hong Kong, which decelerated further to a double-digit percentage decline in comparable sales.
Mainland China comparable sales grew by a low single-digit percentage and Japan saw exceptional growth, albeit off a small base. Digital continued to outperform, with mobile penetration of sales more than tripling compared to the prior year, supported by the investment we made in improved mobile functionality last year.
In FY 2016, net new space is still expected to contribute low single-digit percentage growth to total retail revenue, with 15-20 mainline store openings and a similar number of closures.
Commenting on the first quarter performance, Christopher Bailey, Chief Creative and Chief Executive Officer, said, “These results reflect our ongoing emphasis on serving our customers ever more effectively on and offline, and continued innovation in design and marketing – particularly around the iconic, British-made products that performed so well in the period. By product, in mainline, we saw continued strong growth from our core heritage trench coats and cashmere scarves, as well as ponchos, an emerging key category. During the first quarter, we opened five mainline stores and closed three.”
Burberry continues to expect total wholesale revenue at constant exchange rates to be broadly unchanged in the six months to September 30, 2015. Excluding Beauty, it expects wholesale revenue to be down by a low single-digit percentage. For Beauty, wholesale revenue in FY 2016 is expected to grow by 10-15 percent at constant exchange rates, with additional contributions from retail and digital channels.
In FY 2016, if exchange rates remain at current levels, reported retail/wholesale profit is expected to be about 20 million pounds (31.3 million dollars) higher than at FY 2015 rates. This would be an increase of about 10 million pounds (15.6 million dollars) since the guidance at the preliminary results in May 2015. The company expects this increase to be offset by a more adverse geographic mix, particularly from the high margin market of Hong Kong.
Total licensing revenue for FY 2016 is anticipated to be down by about 40 percent at constant exchange rates, due to the expiry of the Japanese licences. However, it expects double-digit percentage growth from the global product licences and about 25 million pounds (39.1 million dollars) from Japan. Group adjusted PBT at constant exchange rates is expected to be more second-half weighted than in FY 2015.