LONDON — Burberry Group plc’s first-quarter sales increased 26 percent, propelled by early wholesale shipments of fall and winter merchandise.
For the three months ending June 30, sales increased to 211 million pounds, or $415 million, compared with 167 million pounds, or $328 million, during the same period last year.
The company said the rise was driven by higher wholesale revenues and strong retail sales in the U.S.
All dollar figures have been converted from the pound at average exchange rates for the period.
Responding to analysts’ predictions of a downturn in the global luxury markets — which sent Burberry’s share price sliding 6.2 percent last week — chief financial officer Stacey Cartwright acknowledged “volatility” in retail sales.
“We’re seeing big swings up and down in different geographical markets almost every day, every week,” she said in an interview. “I think that’s where our well diversified portfolio comes into its own. We’ve got a very broad geographical spread and we’ve also got a very broad, diversified product range. In terms of the slowdown, we’re not saying we’re immune, but we’re saying the diversification stands us in very good stead compared to some of our peers.”
Burberry’s share price closed up 0.63 percent to 399.5 pence, or $7.99, in London Stock Exchange trading on Tuesday. The stock has dropped about 30 percent this year and last week Burberry was one of seven luxury companies whose profit estimates were reduced by Goldman Sachs.
Retail sales increased 19 percent, to 115 million pounds, or $226 million, from 97 million pounds, or $191 million, in the year-ago period. The company said growth came from sales of products such as lightweight outerwear, shoes and belts.
In terms of comparable-store sales, the Americas region performed best during the period. Cartwright said during a conference call that stores in New York, San Francisco and Chicago all performed well, as had stores in oil producing regions such as Texas.
“I am pleased with Burberry’s start to the year in an increasingly challenging external environment,” said chief executive officer Angela Ahrendts. “Our brand momentum is strong, driven by product innovation and a focused management team.”
Overall, Burberry’s retail and wholesale sales in the U.S. rose 25 percent during the period to 52 million pounds, or $102 million. However, the company said that as a result of excess inventory, more stock was sold in the markdown period during the quarter, which it said continues into the second quarter.
Across all regions, the company’s comps rose 4.5 percent during the period. Comps in France, Germany and Korea all showed strong growth, alongside the U.S.
Burberry increased its retail space by 12 percent during the quarter, compared with last year, opening two stores in Cannes, France, and Budapest and 14 concessions in Korea, Italy and Spain.
The company, however, said Spain “remains a challenging market.” Wholesale and retail sales there rose only 1 percent during the period, and on an underlying basis fell 14 percent. Burberry said it expects Spain’s wholesale sales to show continued weakness in the first half to Sept. 30, with a decline of at least 10 percent.
Wholesale sales rose 45 percent during the quarter, to 80 million pounds, or $157 million, compared with 55 million pounds, or $108 million, during the same period last year. The company said that this was partly because of improvements to its supply chain, which meant that merchandise was delivered to stores earlier.
“We’ve placed the investments in the business where it needs to be placed, in terms of the IT systems and the supply chain functions,” Cartwright said.
The company said it expects wholesale revenue to increase more than 10 percent on an underlying basis in the six months to Sept. 30, and forecast wholesale sales in emerging markets to continue to rise, with wholesale sales in North America set to gain in excess of 20 percent.
Burberry will release a first-half trading update on Oct. 14, for the six months to Sept. 30.
Alberta Ferretti's "Rainbow Week" sweaters are back. The designer closed her #MFW show with a few day-of-the-week sweaters, which first debuted on the catwalk last January as part of the pre-fall 2017 collection. #wwdfashion (📷: @delphineachard)