LONDON – Mainland China and the U.K. fueled first-quarter retail revenue growth at Burberry Group as chief executive officer Marco Gobbetti steps into his new role at the brand.
Burberry said Wednesday that retail revenue in the three months to June 30 grew 13 percent at reported exchange to 478 million pounds, or $612 million. At constant exchange, growth was 3 percent, in line with analysts’ forecasts. Figures have been converted at average exchange for the periods to which they refer.
Gobbetti, who took over as ceo last week, said Wednesday the company was pleased with its performance in the quarter, while “mindful” of the work still to do. He has taken over the role from Christopher Bailey, who remains chief creative officer and has been given the new title of president.
“This is a time of great change for Burberry and the wider luxury industry. I look forward to building on the foundations Christopher and the team have put in place and creating new energy to drive growth,” Gobbetti said.
The company said comparable sales were up 4 percent, with Mainland China fueling mid single-digit percentage growth in the Asia Pacific region. The Europe, Middle East and Africa region notched high single-digit percentage growth, led by a robust U.K. market, where the weaker pound continues to drive tourist spend.
The Americas region, where Burberry is re-positioning itself and where department store sales continue to be challenging generally, recorded a low single-digit percentage decline. The company said the relative strength of the U.S. dollar drove a strong increase in sales from U.S. customers abroad, while tourist and domestic demand waned.
Burberry said fashion and innovation both led growth in the three-month period, with sales of leather goods climbing by a mid-teens percentage.
The company continues to slash the number of products on offer, which is now down more than 10 percent year-on-year. Burberry added that footfall in its mainline stores remained “challenging,” while spend from returning top customers drove growth and direct-to-consumer digital sales were on the rise.
For the full year, Burberry said it will focus on productivity from its current store footprint with no material contribution from net new space expected. Total underlying wholesale revenue in the first half is set to be broadly flat, while in the second half, Burberry said it expects underlying wholesale revenue, excluding beauty, to be down due to changes the company is making to tighten distribution and re-position itself in certain markets.
The company added that the expected negative impact of year-on-year exchange rate movements on reported, adjusted pre-tax profit for the full 2017-18 year is around 25 million pounds, or $32.2 million, slightly less than Burberry had forecast in April.