Burberry reports Q1 trading update; retail revs +17% Yoy; comps +12%
Reports retail revenue GBP370 mln, up 17% underlying (up 9% at reported FX) may not compare to revs of $397.1 mln CIQ est
- Comparable sales up 12%
- In line with co's expectations for the quarter, driven by planned investment
- Double-digit growth in Asia Pacific and Americas; low single-digit growth in EMEIA
- Double-digit growth across all three main product categories
- Digital continued to outperform in all regions
- Ongoing brand momentum driven by consistent execution of strategies
- Record customer engagement through digital, including Shanghai event and mens runway show
- Four mainline stores opened; three in key European airports for the travelling luxury customer
- Strong customer response to product, especially mens tailoring, womens Prorsum and solid leather accessories
- The key drivers of retail growth remained consistent with previous periods
- Reflecting evolving consumer behaviour, traffic remained soft offline but grew online
- Conversion increased both offline and online, driven by our investment in customer service
- Digital continued to outperform in all regions, reflecting more targeted marketing and continued strong customer response to services such as orders taken on iPads in-store and collect-in-store
- In mainline, there was double-digit growth in mens, womens and accessories, with balanced performance across fashion and replenishment
- Mens tailoring, womens Spring/Summer 2014 Prorsum and iconic rainwear all performed well, reflecting our focus on these categories
- In accessories, solid leather continued to increase its share of the large leather goods mix
- Retail: In FY 2015, net new space is still expected to contribute low to mid single-digit percentage growth to total retail revenue.
- Wholesale: Excluding Beauty, Burberry continues to expect wholesale revenue at constant exchange rates to be broadly unchanged in the six months to 30 September 2014 (2013: GBP244m). For Beauty, the fifth product division, wholesale revenue is still expected to grow by about 25% at constant exchange rates in FY 2015.
- Retail/wholesale profit: If exchange rates* remain at current levels, the full impact on reported retail/wholesale profit in FY 2015 will be material. As an indication, rebasing FY 2014 retail/wholesale profit for current effective exchange rates would now reduce reported profit by about GBP55m (H1 weighted) and adjusted operating margin from 17.5% to around 16%.
- Licensing: For FY 2015, Burberry continues to expect broadly unchanged revenue at constant exchange rates in both Japan and global product licences. At current exchange rates*, reported licensing revenue in FY 2015 will be reduced by about GBP10m given the movement in the sterling/yen rate.