Shares in high fashion firm Burberry Group PLC (LON:BRBY) tumbled in early trading, as it reported a decline in its wholesale and licensing arms.
Retail revenue was a bright spot, with sales for the three months to the end of September – the second quarter of the group’s financial year – up 2% on an underlying basis, in line with consensus.
The 2% year-on-year gain in like-for-like sales followed a 3% fall in the first quarter, and meant that LFL sales for the first half of the financial year were flat.
The LFL numbers strip out the effect of currency movements, and as expected, the weakness of sterling gave a huge lift to the sales performance on a reported basis, with second quarter retail sales up 11% year-on-year.
Wholesale revenue was down an underlying 14% from a year earlier at £287mln. Licensing revenue, at £13mln, was down 54% on a year earlier on an underlying basis.
"In a challenging external environment, we continue to focus on product innovation, retail productivity and digital leadership, against a backdrop of sustained action and investment to deliver long-term out-performance of our brand and business,” said overworked chief creative officer and chief executive officer, Christopher Bailey.
“The progress we are making to improve our ways of working, the agility of our teams to react to changes in consumer behaviour and the strength of our brand give us confidence for the future. We remain on track to deliver our financial goals," Bailey said.
Liberum said it was a solid enough quarterly update, and noted that, if the pound stays at its current level against the US dollar, the group will see a £90mln currency windfall, only £50mln of which was currently factored into the broker’s forecasts. Nevertheless, Liberum maintained its recommendation to sell the shares, saying the group “struggles to drive meaningful growth”.
Burberry shares fell as low as 1,395p from last night’s close of 1,512p before recovering to 1,416p, down 96p.