Strong trading and a weak pound over Christmas have helped Burberry to post a better-than-expected third quarter.
The British luxury fashion house said that its retail revenue hit £735 million in the three months to December 31, which was up 3 per cent on a like-for-like basis. This was ahead of expectations; analysts at Haitong Research expected comparable sales growth of 2 per cent.
The retailer, which is in the midst of a three-year “growth plan”, said that the results showed that its strategies for the long-term were delivering early results and that its efficiency plans were on track.
Much of the pick-up in performance was driven by strong trading in the Europe and Middle East. In the UK the fall in the value of the pound led to “exceptional” sales. Burberry said that its comparable sales in Britain were up 40 per cent as well-heeled tourists took advantage of the weak pound.
In a further boost for the retailer, the volatile Asia Pacific region also returned to growth after a series of quarters in which footfall fell in areas such as Hong Kong. Burberry said that it had recorded an “acceleration” in mainland China and improvement in Hong Kong, which recorded a low single-digit decline. Burberry’s American region has continued to struggle amid fluctuating demand, recording a low single-digit percentage decline.
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Christopher Bailey, the chief creative and chief executive of Burberry, said: “With a record number of views of our [Christmas advert] and strong demand for new products in our collections, this third-quarter improvement reflects early progress from our plans to drive Burberry’s performance for the long term.”
Burberry has been grappling with issues affecting the whole of the luxury sector and in May outlined a three-year “growth plan” and £100 million of cost-cutting to overcome “challenging conditions” after full-year profits fell by 10 per cent, largely as a result of falling spending by Chinese consumers. It has also shaken up its board, hiring Marco Gobbetti, the former boss of Céline, as its new chief executive. Mr Gobbetti will start next week but will only assume his full duties in July when, in an unusual move, he will run Burberry jointly with Mr Bailey, who will become “president” and chief creative officer.
This morning Burberry, which is on track to deliver £20 million of cost savings in 2017, said that consumers were increasingly “engaging” with its brand with sales growth led by “newness across all categories, with particular strength in bags”. Its online business is also growing, with the retailer reporting “significant growth” in sales from mobile phones.
Burberry said that its profit for the full year would be in line with expectations. Shares rose by 1.6 per cent to £16.19 in early trading.