It was very much business as usual for UK luxury fashion house Burberry Wednesday. There were the usual profits and sales rises to report …
It was very much business as usual for UK luxury fashion house Burberry Wednesday. There were the usual profits and sales rises to report (although the former was more slender than expected, weighed down by those pesky exchange rates). Those self-same exchange rates were also to blame for a lower fiscal 2016 profits outlook, unnerving the markets as its shares slipped 4% in early trading in London.
But let’s not be picky. Once again, Burberry has proved that it really knows its customer – the world over – and that its product is continuing to resonate.
So, let’s look at the numbers. For the year ended March 31, net profit rose 4.3% to £336.3m ($521.6m). The figure would have been a lot better but almost £40m was lost in adverse exchange rates.
Reported revenue rose 11% year-on-year to £2.52bn, or up 8% currency-neutral, driven by growth in both its retail and wholesale ops with a combined growth of 12% on an underlying basis.
Burberry has a knack of maximising its heritage while also having an image as a directional fashion house and this obviously bore fruit in the latest period. The company cited its “intense focus” on core heritage, British-made trench coats and cashmere scarves, plus ponchos as the principal drivers of the year’s growth.
Combined, mainline sales of outerwear and soft accessories grew by nearly 20% in the year, it noted.
Revenue in menswear, “an under-represented category for Burberry”, increased by 10% underlying.
Oh, and let’s not forget its digital offer where continued investments helped e-commerce “outperform across all regions”. In online, mobile doubled its share of revenue in the year, following the launch of an upgraded mobile platform in H2, it noted.
Retail, meanwhile, “significantly outperformed wholesale”, where repositioning continued in the US in particular. Retail sales, which now represent 71% of revenue , up from 70% a year ago, jumped 14% underlying, with comparable sales up 9%.
Burberry said store footfall declined but was offset by improved conversion and higher average transaction values.
Mainline retail sales were driven by double-digit growth in outerwear, supported by core replenishment styles and tailoring, it said. Scarves and shoes drove growth in men’s accessories, which comprise only about 20% of total accessories retail revenue, another area of opportunity for Burberry.
Wholesale revenue for the year rose 6% underlying, or up 3% at reported FX.
Beauty, meanwhile, delivered 26% underlying growth in the year.
By region there was double-digit growth in Americas and EMEIA plus mid single-digit growth in Asia Pacific, due to “disruptions” in Hong Kong.
Completing his first year at the helm replacing longtime CEO Angela Ahrendts, a “pleased” Christopher Bailey said: “Against a challenging external backdrop, our global team has focused ever more intensely on our core, including celebrating the British-made products that are our brand signature and extending our online and offline integration.
“At this early stage of the year, we are seeing increased uncertainty in some markets. Against this background, we will continue to manage our business dynamically – capitalising on the significant opportunities we have by channel, region and product to create long-term shareholder value.”
* Burberry cut its guidance for wholesale and retail profit for fiscal 2016 would likely come in around £40m, lower than expected, citing unfavourable foreign-exchange movements.