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Burberry with stable sales

Jan 14, 2016 United Kingdom
Burberry with stable sales
The luxury British-based brand had a 1% retail revenue growth in the third-quarter, mainly driven by a minor recovery in China and improved demand in Europe
In the third quarter, Burberry delivered underlying retail sales growth of 1%. Comparable sales were unchanged year-on-year, an improvement from negative 4% in the second quarter.

Asia Pacific registered mid single-digit percentage decline in comparable sales. However, excluding Hong Kong and Macau, comparable sales grew by a mid single-digit percentage. Growth resumed in both mainland China and Korea. Japan remained strong with around 50% comparable sales growth.

EMEIA (Europe, Middle East, India & Africa) achieved mid single-digit comparable sales growth. Driven by the travelling luxury customer, Italy and Spain continued to deliver growth in excess of 20%, while France slowed. The UK, which accounts for over one-third of EMEIA’s retail revenue, became more challenging, with a slowdown from travelling customers, primarily Chinese and Middle Eastern consumers.

The Americas delivered marginally positive comparable sales growth. Consistent with the first half of the year, Canada, Brazil and Mexico, which account for over 15% of Americas’ retail revenue, together delivered double-digit percentage comparable sales growth. The United States experienced some recovery from domestic customers in the third quarter, but a further deterioration from all tourist groups.

In what remains a challenging external environment, Burberry expects adjusted profit before tax for FY 2016 to be broadly in line with market forecasts, supported by a further reduction in the performance-related pay charge, additional discretionary cost savings and an FX benefit.

Looking forward to FY 2017, the outlook for demand in luxury is uncertain and underlying cost pressures persist for the sector. Against this background, the company is focusing in their  productivity and efficiency agenda and addressing the optimization of future organic revenue growth opportunities.

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