LONDON — Burberry’s retail revenue rose 4 percent to 498 million pounds in the first quarter as Riccardo Tisci’s new designs began to dominate shop floors internationally.
At constant exchange rates, revenue was up 2 percent, while comparable store sales climbed 4 percent in the 13 weeks ended June 29.
The trading update sent Burberry shares soaring throughout the morning: By 11:30 a.m. local time, they were up 12 percent to 22.32 pounds.
Burberry said Tisci’s new collections, including men’s and women’s apparel, grew by a double-digit percentage compared to the prior year, with the proportion of new Tisci designs increasing to around 50 percent in June, compared with 10 to 15 percent in March.
That spike in the number of new designs hitting the shop floor underpinned the improvement in comparable store sales growth, Burberry said.
“This was the first quarter where the proportion of new product in our stores was meaningful and the response from consumers was very promising. New collections delivered strong double-digit percentage growth, with all regions ahead of prior-year equivalent collections. Consumers responded positively to the new aesthetic and house codes,” Burberry said in a trading update on Tuesday.
The response to the new product was also strong in wholesale, where many of Burberry’s luxury doors saw “significantly higher” sell-through compared to previous collections.
Accessories was a weak spot, with sales declining. Burberry argued that the benefit from new styles was offset by the softer performance of lines from previous collections.
“This was a good quarter in our multiyear journey to transform Burberry,” said Marco Gobbetti, Burberry’s chief executive officer.
“We increased the availability of products designed by Riccardo, while continuing to shift consumer perceptions of our brand and align our network to our new creative vision.”
He said the company was on track with its plans and confirmed its outlook for fiscal 2019-20 of “broadly stable” revenue growth and operating margin at constant exchange, including cumulative cost savings of 120 million pounds.
Burberry said Asia-Pacific grew by a high-single-digit percentage, driven by mainland China, which was up in the mid-teens, while the EMEIA region was up by a low-single-digit percentage “supported by tourist spend, which particularly benefited the U.K.”
The Americas region was flat, with the U.S. growing by a low-single-digit percentage. Canada was negatively impacted by a later markdown period.
Overall retail space declined 2 percent, including the planned, non-strategic store rationalization program.
Burberry said comparable store sales growth is set to accelerate as new Tisci-designed product builds through the year. That growth will be partially offset in the second half by less markdown inventory compared to the prior year.