Cautious Burberry sees luxury market toughening despite strong H1 sales

Despite strong H1 global sales, UK fashion house Burberry maintained a cautious outlook as an increasingly difficult luxury-goods market is expected to weigh on profitability this year. Burberry posted a 7% rise (up 14% currency neutral) in total revenue to £1.1bn for the six months to September 30. Retail sales, meanwhile, lifted 8% (up 15% currency neutral) to £748m, reflecting a strong performance across all regions, supported by continued digital growth.

Those retail sales were in line with analysts’ expectations and were fell short of Q1’s 17% currency neutral growth.

Comparable store sales for H1 grew 10%, compared to a 12% rise in Q1. Burberry said it saw double-digit comp sales growth in Asia Pacific (up 9% reported, plus 17% underlying) and Americas (+9% and +17%, respectively) and mid single-digit growth in EMEIA (+6% and +11%).

Wholesale revenue rose 8% (up 13% currency neutral) to £317m and by 5% excluding beauty, which jumped 55% in the period to£75m at wholesale and £4m at retail.

Key product drivers included rainwear, women’s Prorsum, leather bags and men’s tailoring, it noted.

However, demand from travel retail and European customers will be “more cautious” in H2 and the company expects “slight downward pressure” on margins, Burberry said in its Tuesday statement.

But an upbeat chief creative and chief executive officer Christopher Bailey said: “Looking ahead, while mindful of the more difficult external environment, we have never been better prepared internally for the all-important festive periods.”

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