Burberry’s share price rose 1% in risk-on trading on Thursday after it released better-than-expected trading numbers.
Thanks to favorable exchange movements, the FTSE 100 firm’s revenue rose 11% year-on-year to £1.35 billion between April and September. Stripping out the impact of the stronger US dollar sales grew 5%.
This jump in sales has come despite the ongoing COVID-19 lockdown in mainland China. Burberry’s sales grew 18% year over year, excluding business in this key Asian market.
Adjusted operating profit rose 21% to £238 million in the first half. This was helped by a 150 basis point increase in adjusted operating margin to 17.7%.
leather sales increased
Demand for Burberry’s leather goods was particularly strong in the six months to September. The business said that “this was driven by handbags with Lola now our best seller and helped by the introduction of the Francis size for AW22.”
Leather sales grew 11% between the first half, rising to 15% in the second quarter.
Comparable store sales at Burberry grew 5% and improved strongly with progress in the first half. Turnover growth of 1% in the April to June quarter accelerated to 11% in the next three months.
Wholesale sales increased 6% at real exchange rates and 1% at constant currencies.
Burberry also announced a change in strategy on Thursday. It said the planned changes are “designed to focus on Britishness and strengthen our connection to British design, craft and culture.”
The company is looking to double the sales of its leather goods, footwear and ready-to-wear products for women under the new plan. It is also seeking to increase ancillary revenue from outerwear sales by about 50% in the medium term and by the same percentage in the long term.
In addition, Burberry plans to double e-commerce sales in the medium term. It also aims to convert all its stores to its new concept by the end of fiscal 2026.
£5 billion revenue target
Chief Executive Jonathan Ackroyd made the comments today ,I am confident in our ability to deliver on our medium-term goals and to realize our potential as a modern British luxury brand. He added that the company is aiming to deliver £5 billion in annual revenue over the long term.
Burberry also announced today plans to increase sales to £4 billion at constant exchange rates over the medium term.
In October the company replaced Riccardo Tisci as chief creative officer with Daniel Lee. Tisci had held the role for the previous five years.
Burberry said it was maintaining guidance through the end of 2024, although it added that it was “recognised by the challenging macro environment and its potential impact on business, particularly COVID-19 related disruptions in Mainland China and Europe and recession risks”. conscious of.” Of America.”
Hargreaves Lansdowne analyst Sophie Lund-Yates said Burberry’s first-half performance has been “turbo charged by big-spending American tourists to Europe as they took advantage of the stronger dollar.”
However, she added that there could be some turbulence coming the company’s way.
Lund-Yates said, “Luxury names are more insulated than other retailers in the face of an economic downturn. But she added that”[Burberry] still seems a bit more accessible than some other ultra-high-end brands” and so “a high proportion of customers drop off if the downturn lasts too long and too deep.”
Credit: www.forbes.com /