“We believe this will be the best soft luxury performance in the quarter,” Barclays Equity Research said, with Burberry considered the first big European player to report revenues for the three months ended June 30.
“Burberry remains one of the very few luxury companies to continue to enjoy double-digit revenue growth,” echoed Citi analyst Thomas Chauvet.
The company recorded a 9 percent jump in revenue to 370 million pounds, or $622.5 million at average exchange rates. Stripping out the impact of exchange rates, the sales gain stood at 17 percent.
But it warned that if the British pound remains as strong as it is today, reported retail and wholesale profit would be reduced by about 55 million pounds, or $93.7 million at current exchange, and that the adjusted operating margin would fall from 17.5 percent to about 16 percent. Burberry’s fiscal year ends on March 31, 2015.
During a conference call, chief financial officer Carol Fairweather said there was little the company could do vis-à-vis exchange rates beyond hedging where it can.
“We’re a luxury brand, and we need to source appropriately,” she said, responding to a question about possible offsets, including changing production sites.
Fairweather also ruled out price increases, while allowing that the company is monitoring competitors closely and “we tend to be a fast follower.
“We’re controlling what we can control. We won’t change our key strategies, and continue to focus on the underlying strength of the business,” she stressed.
Fairweather noted travel retail would be a focus going forward, with an opening in Hong Kong and relocation at London’s Heathrow Airport among Burberry’s next moves.
“We see this as an opportunity for us,” Fairweather said, while declining to say how many of the 20 to 25 stores planned for fiscal 2015 would be in this channel.
Burberry trumpeted double-digit growth in Asia Pacific and the Americas in the quarter. Reflecting weaker economies elsewhere on the globe, Europe, the Middle East, India and Africa registered low-single-digit growth.
Fairweather cited lower tourist traffic among Russians and mainland Europeans, but no slowdown among Chinese, and asserted that Burberry’s digital focus gives it a “point of difference” in the market, particularly among young consumers.
Mainland China and Hong Kong registered double-digit growth in the quarter, with Southeast Asia “more challenging,” Fairweather noted.
Burberry now offers a click-and-collect service in 131 stores, and iPad sales in-store represent a quarter of all digital sales.
“Digital continues to outperform,” Fairweather said. “The U.S. in particular is a market where digital punches above its weight.”
She said consumers there are particularly “channel agnostic” and said its “customer service through digital” represents a strong differentiator.
The company cited a double-digit pace across men’s, women’s and accessories, notably large bags in solid leathers.
Fairweather noted Burberry recently trialed a more focused offering of its iconic, made-in-Britan trenchcoats — a choice of three styles, three colors and three lengths — in 30 stores, and it has “resonated very well with our consumers.” The company plans to roll out the merchandising strategy to its entire network of directly owned stores.
Burberry’s results came ahead of the company’s annual general meeting today, where it is likely to hear shareholder discontent over the pay package for Christopher Bailey, Burberry’s chief creative officer who also took on the role chief executive officer last May following the exit of Angela Ahrendts, who left the company to become head of retail at Apple Inc.
Fairweather skirted questions about the revolt, insisting the AGM was the proper forum.
Bailey could earn up to 8.1 million pounds, or $13.8 million, per year, including a cash allowance of 440,000 pounds, or $749,215, according to the company.
He also received a golden hello in the form of shares worth up to 7.6 million pounds, or $12.9 million. The shares packet is linked to the company’s performance.
Bailey’s base salary is 1.1 million pounds, or $1.9 million, and he will also receive a cash bonus, share awards and pension contributions.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast