LONDON — Burberry Group’s retail sales in the key third quarter fell short of the company’s expectations, remaining flat at reported rates and increasing one percent on an underlying basis.
Sales in the October to December period were 603 million pounds, or $917 million, in what chief creative and chief executive officer Christopher Bailey said was “a tougher environment than expected” for the luxury sector as a whole.
The company saw Mainland China and Korea both return to growth in the three months.
Burberry said the one percent underlying growth in the quarter came from new space, with comparable sales unchanged year-on-year.
By comparison, in the first half Burberry’s retail sales grew 3.5 percent on a reported basis, and 2 percent on an underlying one.
Looking ahead, Burberry said it expects adjusted profit before tax for the full year ending March 31 to be broadly in line with market forecasts, and supported by a further reduction in management bonuses, additional discretionary cost savings, and a boost from foreign exchange rates.
In the 2016-17 fiscal year, the company said the outlook for demand in luxury remains uncertain, adding that “underlying cost pressures persist” for the sector.
Burberry cited a return to growth in Mainland China, although problems in Hong Kong and Macau continue to weigh on sales, and Asia-Pacific overall saw a midsingle-digit percentage decline in comparable sales.
Burberry said that excluding Hong Kong and Macau, comparable sales grew by a midsingle-digit percentage, with growth also resuming in Korea.
Comparable sales in Hong Kong declined again by more than 20 percent, driven by a further significant decline in footfall, although stores remain profitable, Burberry said.
Bailey said the outlook for the luxury sector as a whole remains uncertain as the consumer and environment evolve. “However, we are anticipating and responding to these changes through an intense focus on new growth opportunities and the acceleration of our productivity and efficiency agenda,” it noted.