Tourist spend and China helps Burberry beat sales forecasts

Thu Nov 17 2022
Mark Cooper (3085 articles)
Tourist spend and China helps Burberry beat sales forecasts

British luxury brand Burberry (BRBY.L) said quarterly comparable store sales rose 11%, a jump on its prior quarter and beating market forecasts, boosted by increased tourist spend in Europe and the easing of widespread COVID restrictions in China.

The second-quarter performance lifted first-half revenue to 1.35 billion pounds ($1.61 billion), up 5% in constant exchange rates and just ahead of forecasts, while adjusted operating profit rose 6% to 238 million pounds

Chief Executive Jonathan Akeroyd also presented his plan to drive growth alongside the results, including a target to broadly double sales of leather goods, shoes and women’s ready to wear, and grow outerwear by around 50% in the medium term.

Under the creative direction of its new designer Daniel Lee, Burberry would “refocus on Britishness”, it said.

“Burberry has an extraordinary legacy, a unique British heritage and a very strong platform to build on, as shown in our half-year results,” Akeroyd said on Thursday.

“Our focus in this next phase is on growth and acceleration,” he said, adding that the brand’s long-term ambition was to achieve sales of 5 billion pounds.

The company, known for its camel, red and black check, said it maintained its near-term guidance. It had targeted high-single digit revenue growth and a margin of around 20%.

Comparable store sales in mainland China, Burberry’s biggest single market, stabilised in the second quarter after falling 35% in the first, it said, despite some local COVID lockdowns in September.

Europe continued to perform strongly, it said, with sales up 25% in the second quarter, boosted by a rise in tourists from the United States, the Middle East and locations in Asia outside mainland China.

The Americas continued to be a weak spot, however, with sales in second quarter down 3%, reflecting some pressure in the entry level items and U.S. customers spending more in Europe rather than at home.

Mark Cooper

Mark Cooper

Mark Cooper is Political / Stock Market Correspondent. He has been covering Global Stock Markets for more than 6 years.