Burberry sales growth slows as demand weakens in UK and China
Burberry, the iconic luxury goods retailer, has reported that its retail sales growth slowed in its second quarter as demand fell in the UK and China.
The group said that in the six months to the end of September, total underlying revenues rose 8% to £883 million with first quarter growth of 11% slowing to 5% in the second quarter. Retail revenue increased by 10% to £577 million.
Whereas first half like-for-like sales rose 3% year-on-year, like-for-like growth slowed to 1% in the second quarter from 6% in the first quarter.
Wholesale revenue increased by 5% on an underlying basis to £253 million. Licensing revenue was down 5% on an underlying basis to £53 million.
Angela Ahrendts, chief executive officer, said: "Against record prior year comparatives, Burberry delivered 8% total revenue growth and 10% retail growth in the first half, albeit slowing in the second quarter. In a more challenging external environment, footfall declined but brand momentum remained strong, particularly with our higher spending luxury consumer.
"Our highly experienced team remains very focused on the consistent execution of our key strategies, engaging consumers through innovative retail and digital marketing initiatives as we enter the most important quarter of the year. We continue to invest for long term growth in flagship and emerging markets, while tightly controlling discretionary spend."Burberry said that the key driver of the softer second quarter performance was footfall, mitigated by higher average transaction values."
Burberry warned last month that its pre-tax profit for the year to end March would be at the lower end of market expectations due to a slowing in same-store sales.
For the second quarter, Americas and Europe comparable store sales were unchanged year-on-year, while Asia Pacific delivering slightly positive comparable store growth. Compared to the first quarter, Hong Kong, France and Germany maintained their performance, while the UK and China slowed. Korea and Italy remained weak.
During the first half, Burberry opened 13 mainline stores and closed seven. Openings were focused in flagship markets including Regent Street, London, Pacific Place, Hong Kong; Milan and Rome. Average retail selling space increased by 12% in the first half, biased towards Asia Pacific and Europe.
The new men's tailoring and men's accessories offerings had performed particularly strongly.
In the second half of the 2012/13 financial year Burberry plans to increase its average retail selling space by around 14%. Openings in flagship markets will include Chicago, Shanghai and a standalone menswear store in Knightsbridge in London, as well as further stores in Brazil, Mexico and the Middle East.
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