Burberry Group PLC (LON:BRBY) said sales declined over the key Christmas trading period but the fashion retailer maintained its full-year guidance as it made progress with its plan to take the brand more upmarket.
In the third quarter ended December 29, retail revenue totalled £711mln, down 1% at actual exchange rates from a year ago or down 2% at constant currency.
On a like-for-like basis, store sales edged up 1% but that marked a slowdown on the 2% growth reported a year ago.
Burberry said sales in Mainland China rose by "mid-single digits" while Europe, Middle East, India and Africa region showed a "small improvement" in tourist spending but the Americas were hit by a decrease in the number of customers shopping in stores.
For the year, the British designer label still expects broadly stable revenue and adjusted operating margin at constant currency along with cost savings of £100mln.
"I am pleased with our progress in the quarter as we continued to build brand heat around our new creative vision and shift consumer perception of Burberry,” said chief executive Marco Gobetti.
READ: Burberry’s new design chief gets off to a hot start
Tisci's debut collection to be launched in February
The company is set to release the debut collection of new chief creative, Riccardo Tisci, to stores in late February. Tisci, the former Givenchy designer who was hired last March to help Burberry reposition its brand, showcased his collection at London fashion week last September and it was well received.
“Excitement is growing ahead of next month's launch of Riccardo's debut collection,” Gobetti said.
“We will continue to manage the business dynamically as we reposition the brand.”
Burberry also teamed up with Vivienne Westwood to launch a limited-edition line of clothing in December. The group said the pieces saw “strong global demand” and attracted “exceptionally high traffic” to its website.
As part of its restructuring and brand makeover, Burberry plans to accelerate its plan to remodel its wholesale operations and close non-luxury doors in the US. In retail, the firm will refurbish 10 key flagship stores by the end of the financial year.
In mid-morning trading, shares dipped 1.1% to 1,756p.
Brand revamp will take time to deliver material growth, says analyst
“Luxury goods firm Burberry may have reported a sales drop with its third-quarter trading update, but investors will still be slightly relieved that sales from China, despite all the recent negative headlines about the country’ economy, held up reasonably well," said AJ Bell investment director Russ Mould.
He added that Burberry's plan to go more upmarket seems like a sensible approach but it may take time to gain traction and deliver material growth.