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Burberry unveils flat sales as tourism demand softens in the UK and Europe

Burberry left its full year guidance unchanged and said it is on track to deliver cumulative cost savings of £100mln

Burberry
Burberry boss Marco Gobbetti admits it will "take time to achieve our ambitions"

Burberry Group PLC (LON:BRBY) unveiled flat first-quarter retail revenue as growth in the Asia Pacific and Americas was offset by weaker tourism demand in the UK and Europe.

Shares in the company fell 3.5% to 2,026p in morning trading. 

The luxury fashion brand said it generated retail revenue of £479mln in the 13 weeks to June 30, compared to £478mln a year ago. Comparable sales rose 3% in the period, easing back from the 4% growth reported the same time last year.

The Asia Pacific region grew comparable sales by a “mid-single digit percentage” while the Americas delivered a “high single digit percentage” increase. In the European, Middle East, India and Africa (EMEIA) region, comparable sales fell by a “low single-digit percentage”.

Tourism spending softened in the UK and Europe following a series of terrorist attacks while the Middle East remained weak due to “macro-economic factors”.

Digital sales rose strongly with more consumers making purchases on mobile phones, led by demand in the Asia Pacific.

The company left its full-year guidance unchanged and said it is on track to deliver cumulative cost savings of £100mln.

Tisci to debut collection in September 

Burberry has been making some big changes to its management team and product ranges.

In March, Burberry named Givenchy designer Riccardo Tisci as its new chief creative officer to replace Christopher Bailey.

READ: Burberry unveils former Givenchy designer Riccardo Tisci as its new chief creative officer

Tisci’s appointment at the company, which is best known for its classic trenchcoats, came as a shock to the fashion world as he is known for his edgier creations during his 12 years at Givenchy such as shark teeth and nose ring motifs.

He will debut his collection at Burberry in September.

Burberry chief executive Marco Gobbetti, said: “The team has embraced Riccardo's creative vision and is working well together as we prepare for his debut collection in September, the next step in our journey.  

“While we know it will take time to achieve our ambitions, our progress to-date and the energy in and around the company give me confidence for the future."

New fashion ranges 

Burberry is also collaborating with Vivienne Westwood for a collection of re-imagined iconic styles to launch in select stores in December.

The group is expanding its product range with the acquisition of a luxury leather-goods business from Italian manufacturer CF&P Srl. The company said the deal, which was announced in May, is “proceeding as planned”.

READ: Burberry unveils £150mln share buyback as it reports 2018 profit growth

Meanwhile, the group has started the £150mln share buyback programme announced in May.

Burberry actions 'encouraging' but 'critical moments yet to come'

Steve Clayton, manager of the Hargreaves Lansdown Select UK Growth Shares fund, said Burberry is working hard to keep ranges fresh and customers engaged.

"It all sounds perfectly encouraging, much like the football, but similarly, the critical moments are yet to come," he said. 

"Burberry has a new creative impetus, a commitment to pushing the exclusivity of the brand ever higher and a focus on driving down costs whilst pushing sales effectiveness higher. 

"The success of these will determine the stock’s potential, but it will be years, not hours or days before the final whistle blows

Quick facts: Burberry Group PLC

Price: 2120 GBX

LSE:BRBY
Market: LSE
Market Cap: £8.65 billion
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