Tisci’s new collections are appreciated by customers
Burberry has recorded encouraging H1 19/20 figures. Sales and adjusted operating profit were both above consensus expectations, mainly driven by the strong double-digit growth of Riccardo Tisci’s new collections. Although the reassuring H1 figures have allowed the group to maintain FY guidance, the group’s warning about the incremental pressure on the gross margin from the ongoing protests in HK should be taken cautiously.
14 Nov 19
Slowing, but not worrying, organic growth in Q3
Burberry has reported comparable sales growth below estimates in Q3. Growth has slowed from 3% in H1 to 1% in Q3 due to depressed momentum in America. The debut of Tisci’s collection will be in stores in February which should lift the Q4 performance.
23 Jan 19
Some light in sight
Burberry has increased its retail sales by 3% at CER but wholesale excluding the beauty business was flat. Operating profit was up 4%. Restructuring actions are progressing with promising first signs. A buy-back programme of £150m was announced along with a cash dividend.
16 May 18
H1: Modest organic growth, jump in profits; a restructuring phase will start
Burberry has reported a modest performance in H1. Revenues were up 4% underlying (+9% reported) to £1,263m. Retail sales were up 5% underlying and 4% organically to £944m, while wholesale (excluding beauty sales) stepped up 1% underlying to £233m. Beauty revenue was up 5% underlying to £77m. Total wholesale revenue grew 2% underlying and 8% reported. By region, sales in Asia Pacific edged up 7% underlying (+12% reported) to £461m. In EMEIA, sales were up 5% underlying to £501m. Sales in the Americas slowed down 2% underlying to £292m. By product, growth was balanced between major categories with accessories, women’s and men’s collections growing by 4% underlying to £467m, £353m and £297m respectively. The adjusted operating margin strengthened by 210bp to 14.6% (50bp due to favourable FX moves). The adjusted operating profit edged up by 17% underlying to £185m (includes a £15m benefit from currency moves). Adjusting items are related to the restructuring programme and the transition of Beauty to Coty. Operating profit stepped up 24% to £127m. Net profit amounted to £93m (+29%). Higher profits have strengthened FCF (more than doubled to £171m). An interim dividend of 11p will be paid (+4.8%). A share buy-back plan of £191m was completed in H1 and will be continued up to £350m in FY2018. Burberry announced a strategic restructuring programme to be rolled out during the next three years.
09 Nov 17
Burberry speeds up its growth in Q1
Burberry continued to improve its pace of growth and moved to positive territory in Q1. Retail sales rose 3% underlying (+13% reported) to £478m, boosted by the recovery in mainland China and the strong momentum in the UK. Revenue was up by a mid single-digit rate in Asia Pacific. In Europe, sales edged up by a single-digit rate. Conditions in the Americas remain challenging where revenues declined by a low single-digit percentage. As regards product categories, growth was led by fashion. Leather goods stepped up by a modest mid-teen rate. The transfer of beauty operations to Coty is moving ahead. For FY2018, the company will focus on the productivity of the current distribution network rather than new footprints. Guidance for FY 2018 adjusted pre-tax profit at constant exchange rates is maintained with expected cost savings of £50m.
12 Jul 17
Organic growth still depressed and outlook is poor
The British fashion icon is still experiencing tough market momentum but there was some slight improvement compared to H1. Sales were down 1% underlying in H2 (-4% in H1) to £1,607m. Favourable FX moves raised the reported growth to 14%. The performance was pulled down by depressed wholesale and licensing activities which dropped by respectively 13% (£327m) and 38% (£12m) underlying. Retail revenue was up 3% to £1,268m. Burberry experienced market dynamism in Europe and Asia Pacific; however, the momentum in the Americas is still deteriorating. Sales in Asia edged up 1% underlying to £659m, underpinned by the recovering demand in Mainland China which showed a double-digit growth rate in Q4. The reviving tourism in the UK strengthened sales in Europe by 5% underlying to £536m. In the Americas, revenue declined by 10% underlying to £400m. As regards the product categories, accessories outperformed by a mid single-digit rate to £607m (+4%). Mens and Children collections edged up 2% underlying to respectively £353m and £59m. Women’s collections and Beauty were depressed by 2% and 20% to £468m and £108m respectively. The outlook for the FY2017 results is maintained. For FY2018, no positive contribution of new space is expected for retail, and wholesale is targeted to drop by a mid single-digit rate.
19 Apr 17
At the mercy of a weaker pound
Burberry reported retail sales growth of 4% at CER, reaching £735m (+22% reported), boosted by a strong outperformance in the UK and a promising recovery in Asia. Sales in the home market surged by 40% (on a comparable basis), underpinned by a large inflow of overseas consumers. Other Europe posted a weak performance despite a slight improvement in France. Demand in Mainland China accelerated, showing high single-digit growth, and mitigating the still deteriorated momentum in Hong Kong. In the whole of Asia, comparable sales grew by a low single-digit rate. In the Americas, trading conditions remain challenging as like-for-like sales retreated by a low single-digit rate. Nine months’ sales edged up 10.9% on a reported basis.
18 Jan 17
Disappointing H1 organic growth hidden by favourable FX moves
Amid the challenging context in Hong Kong and the Americas, Burberry benefited from the weakening British pound in the wake of the Brexit referendum. H1 sales were up 5% at reported FX to reach £1,159m, while underlying sales were down 4%. The retail network outperformed with an 11% surge to £859m. Underlying retail revenue was up 2% and comparable sales were flat yoy. Wholesale slipped 6% to reach £287m. Licensing income was halved to £13m following the expiry of the Japanese Burberry licences. As regards regions, the momentum in Hong Kong and Macau remained unfavourable and pulled down the performance in Asia Pacific to -1% underlying. Comparable sales in Mainland China grew at a mid single-digit rate in the second quarter. Sales in EMEIA surged by 10% (+1% underlying) to £456m boosted by a marked outperformance in the UK. The sales momentum remained unfavourable in the Americas and dropped by 2% and 12% underlying to £280m. Removing the FX impact, almost all product categories experienced tough conditions and turned to negative growth, led by beauty items and clothing for women slipping by 17% and 6% respectively. The children’s product line performed well with 9% underlying growth to reach £49m. Management confirmed that digital activity continued to outperform in H1. The new concept of the straight-to-consumer runway collection was welcomed by consumers which should underpin the company’s performance in the coming years. In FY17, net new space is expected to contribute a low single-digit growth rate to retail revenue, while wholesale is expected to retreat by mid-teen rates at constant FX.
18 Oct 16
The slump in travelling luxury customers pulls the Q1 16 performance down
Sales were flat in Q1 16 at £423m. At reported FX, revenue was up 4%. Comparable sales were down 3% and all regions experienced unfavourable momentum. In Asia, the company is still facing a tough backdrop in Hong Kong and Macau which posted a double-digit rate decline in comparable sales. In Japan, the performance was hit by weaker tourism flows which was partly offset by the strengthening in domestic demand. The geopolitical uncertainties have depressed the luxury demand of travellers in Europe and sales have dropped significantly. In the home market, the strong momentum experienced in the last few weeks has been behind the market’s performance with mid single-digit comparable growth. Domestic demand remained strong in the Americas while travelling customers’ spending was down. The digital platform helped to pull the performance up as mobile delivered most of the growth, accounting for c.60% of traffic to the website. Currently, Burberry has 214 retail stores, 213 concessions, 60 outlets and 58 franchise stores.
13 Jul 16
Grey clouds in the sky
Burberry faced a challenging year in 2015 due to the warm weather and slumping demand worldwide. In H2, sales decreased by 2% (1% underlying) to £1,410m. The company’s performance was pulled down in Q4 with sales down 5%. Hong Kong and Macau continued to deliver unfavourable sales momentum (-20% lfl in Hong Kong). The other markets posted poor growth of 1% on average due to the lesser number of travelling luxury customers in Europe and the uneven demand in the Americas. Asia Pacific posted flat underlying sales of £556m, compared to £463m for EMEIA (+0.9%) and £375m for the Americas (-0.8%). The retail network posted a 2% lfl decline (flat underlying) of £1,064m. Wholesale was down by 1% to £330m. Royalties came to £16m, i.e. a drop of 50%. Among the segments, children and beauty goods outperformed with respective growth of 22% and 13%. Fashion clothing dropped by 3%. Digital sales maintained a good performance. In the last six months, five new mainline stores were opened while eight were closed. FY15 sales retreated by 0.3% to £2,515m.
14 Apr 16
The Q3 performance melted by the warm weather
The British luxury icon announced underlying Q3 retail revenue up by 1% to £603m. On a like-for-like basis, the comparable sales remained flat, i.e. an improvement compared to the 4% drop in Q2. Out of Hong Kong and Macau, sales grew by 3% backed by the recovery of the demand in mainland China. By region, the EMEIA outperformed uwith a mid single-digit growth rate driven by a strong performance in Italy, Germany and Spain. The Asia Pacific growth improved from Q2 but remained down in the mid single digits. Japan pursued its strong performance with around 50% comparable sales growth. The Americas reported a marginal increase. By business stream, accessories outperformed apparel, with strength in small leather goods and scarves. Outerwear was affected by unseasonably warm weather. The openings included two mainline stores and three concessions while one mainline store and three other concessions were closed.
14 Jan 16