Shares in Burberry (LSE: BRBY) lifted 1%, or 14p to 1436p, in early trade this morning, following the group’s second-half trading update, which was boosted by a strong Christmas period.
Total revenue rose by 19% on an underlying basis, to £1,298m, with management pointing towards ‘continued investment’ as underpinning sales — indeed, a focus on core outerwear and large leather goods accounted for almost half of the growth.
Retail revenue lifted 13% to £928m, despite actual (offline) footfall remaining soft — but Burberry is a digital leader in high-end fashion retail, and saw online traffic grow again this half while there are plans to further increase investment across the board, as outgoing CEO Angela Ahrendts — who is moving to Apple — commented. She went on to say:
“With the management transition well underway, Burberry begins a new year with Beauty firmly established as the fifth product division and investment in flagship markets, such as Shanghai, further increasing the brand’s appeal to the core luxury customer at home and when travelling. While current exchange rates are a material headwind in what remains an uncertain macro environment, our continued global brand momentum provides an excellent foundation for the future.”
Elsewhere, wholesale revenue (excluding Beauty) delivered an 11% rise to £240m, ahead of previous guidance, while Beauty came in at £93m which was consistent with its target.
Looking ahead, management are confident in strong growth in the Beauty department after a year of change and transition, while “Burberry plans to open about 20-25 mainline stores and close between 15-20, with openings biased to flagship markets and travel retail, while further evolving the store portfolio in China and the Middle East in particular”. Investors were also warned of a potential material adverse impact on reported profit, of around £10m, due to exchange rates between the sterling and yen.
