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Burberry Continues to Post Double-Digit Comps for Q1

Burberry posted an increase in comps in the low double digits for Q1 thanks to the Americas, Hong Kong, Mainland China and Asia Pacific. Thus, the company posted an increase in comparable sales of 12 percent. However, Burberry only saw an increase in comps in the low single digits for Europe, the Middle East, India and Africa (EMEIA), with some sluggishness being recorded in their biggest market. In Q1, Burberry opened up four new mainline stores in
Edinburgh, Madrid, Milan and London Heathrow, while closing down another three.
Q1’s performance indicated the company’s commitment on improving customer experience of the Burberry brand by investing in retail, digital and services, both offline and online. The company posted earnings indicating an increase in retail sales of 17 percent, up to £370 million, compared to £339 million in Q1 2013. Much of the growth is attributable to solid online sales as well as continued growth in the Asia-Pacific area.

Burberry stock reflected the impact of these sales figures and the company’s overall results, as they experienced a 2 percent gain and were, therefore, trading at $49.8. The company’s core unit showed increases in the double digits for women’s apparel, men’s apparel and accessories, with a reasonable performance in terms of fashion and renewal. The company showed they were more focused on their ready-to-wear 2014 Prorsum line for women for spring and summer, along with iconic rainwear and men’s tailoring, which lead to improved growth. Solid leather’s share of the company’s large leather goods mix of the business accessories line continued to grow.

Same-store sales increased more than 7 percent, though this figure doesn’t account for the new stores. While investors were optimistic after seeing the financial results, Burberry’s Chief Creative and Chief Executive Officer, Christopher Bailey, stated that fluctuations in current rate could have a negative impact on the company’s earnings over the following months due to the uncertainty connected to market conditions and the current economic climate.

In terms of guidance for 2015, new stores are anticipated to exhibit growth in the low to mid-single digits percentagewise of the company’s total revenues. The beauty business is expected to feature an increase in wholesale revenues of 25 percent, as long as the exchange range remains constant for FY2015. The retailer of luxury goods is seeing a lot of success in Asia Pacific, where it is anticipated to continue posting revenue growth for 2015 in the double digits.

Analysts are highly confident in Burberry, especially since their new click and collect system that allows customers to purchase goods online and then go and pick them up from their closes store has led to a serious growth in sales. Burberry has become a role model in terms of how it is using its website as well as for their digital innovation inside their stores. If the economy continues to be positive and stabilizes a little in regards to growth, analysts feel Burberry has no reason to see any form of decline in sales in the near future.

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