The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
LONDON, United Kingdom — Burberry Group Plc, the U.K.'s largest luxury-goods maker, reported second-half revenue in line with estimates as digital investments boosted growth, and warned currency moves may hurt profit in the current fiscal year.
Retail revenue rose 13 percent at constant exchange rates to 928 million pounds ($1.6 billion) in the six months ended March 31, London-based Burberry said today in a statement. Analysts predicted 931 million pounds, according to the median of 13 estimates. Sales at stores open at least a year rose 12 percent, compared with a first-half gain of 13 percent.
The company said today that it anticipates a “material adverse impact on reported profit” at current exchange rates in fiscal 2015. Burberry had warned in January that exchange rates would weigh on results in the fiscal second half and beyond. Italian rival Prada SpA this month forecast slowing same-store sales growth in the financial year through January 2015, citing a strong euro and weakening demand in China.
"We are pleased with our second half performance," Chief Executive Officer Angela Ahrendts said in the statement. "While current exchange rates are a material headwind in what remains an uncertain macro environment, our continued global brand momentum provides an excellent foundation for the future."
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Click, Collect
Burberry is spending more on initiatives such as click-and- collect to boost sales through digital channels amid slack traffic in stores. Domestic demand is growing again in Europe, LVMH Moet Hennessy Louis Vuitton SA said last week as it reported its fastest quarterly fashion and leather goods sales in two years. Burberry said today that online sales grew and men shoppers bought more accessories and women snapped up the latest designs from its Prorsum line.
Burberry in January said it was targeting a “modest” increase in full-year retail and wholesale operating margin. Today’s statement didn’t repeat that. It says it expects new space in fiscal 2015 to contribute “low to mid single-digit percentage growth to total retail revenue,” and expects to open about 20 to 25 stores, and shut 15 to 20, as it focuses on its main markets and travel retail in regions including China and the Middle East.
Christopher Bailey will replace Angela Ahrendts as chief executive officer next month, while retaining the role of chief creative officer. Ahrendts is leaving to run retail operations at Apple Inc.
The shares slid 0.6 percent to 1,422 pence in London trading yesterday, giving the trenchcoat maker a market value of 6.3 billion pounds.
By Andrew Roberts; Editors: Celeste Perri, Marthe Fourcade and Robert Valpuesta
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