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Burberry sales bounce back strongly though a third of stores still on reduced hours

Sales trends are encouraging but some investors are worried that chief designer Riccardo Tisci could leave

Burberry Group PLC -

Burberry Group PLC (LON:BRBY) sales rebounded in the first quarter of its new financial year as more stores reopened as Coronavirus (COVID-19) restrictions were lifted.

Retail revenue for the high fashion group – which is still reeling from the news last month that chief executive Marco Gobbetti is leaving at the end of the year - reached £479mln for the 13 weeks to 26 June. This is up 86% on the equivalent period a year ago, while comparable store sales were up 90% versus last year and 1% higher than two years ago.

The period saw an average 11% of stores closed due to COVID-19 restrictions but ended with only 3% of stores still shuttered.

However, the FTSE 100 retailer said 35% of stores are still operating on reduced hours and business in Europe and much of Asia is “still heavily impacted by the significant decline of international tourist traffic”.

Full-year guidance was mostly unchanged except that currency swings are now expected to create a £114mln headwind on sales and £40mln on adjusted operating profit, though wholesale revenues are now expected to grow 60% in the first half.

Gobbetti said the new clothing collections have attracted younger luxury customers to the brand, with strongest growth in leather goods and outerwear.

Although he is leaving, the Italian said the company is “firmly set on a path of growth and acceleration” and is confident of achieving its medium-term guidance for high single-digit top line growth and meaningful margin improvement.

Speaking to reporters later, chief financial officer, Julie Brown addressed concerns that the CEO's departure will lead to chief designer Riccardo Tisci following him out the door.

Brown said that the former Givenchy design honcho “remains very excited by the opportunity to continue to inspire our customers with his imprint on Burberry’s identity, reinforced by the response to his latest collection.

“We’re very, very confident of Riccardo’s position.”

Burberry shares fell 4% to 1,980p on Friday morning. 

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Price: 1797.5 GBX

Market Cap: £7.28 billion

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