In the money: Burberry says big spenders continue spending
As first half sales growth weakened at UK fashion brand Burberry, the company was quick to emphasise that the momentum among its higher spending luxury consumers remained strong.
Speaking to journalists this morning (11 October), chief financial officer Stacey Cartwright said it has seen much more "higher quality sales growth" over the second quarter.
"The growth in average selling price accelerated during the second quarter, we saw out performance of Porsum and London, up six percentage points to 49% of apparel sales in the second quarter. an increased proportion of our purchases were at higher transaction prices and a greater proportion of mainline sales were done at full-price," said Cartwright.
The company pointed to the challenging macroeconomic environment as the reason behind the slow down in sales, as it recorded an 8% increase in underlying sales, against a 30% surge over the same period of the previous year.
While those buying the company's more expensive products continued to spend, consumers at its lower end were harder hit. "We're very pleased that we're seeing more business at the higher end, but it does appear footfall related, and therefore we do feel that it is the aspirational luxury consumer that is more affected against the current macro backdrop," said Cartwright.
She also cited "distractions" as one of the elements constraining growth, including the US election and the changing of the guard in China. "There are a lot of macro concerns still out there," she said.
In the Asia Pacific region, the company recorded an 11% increase in underlying sales to reach GBP299m over the half. In China, which has been the focus of much of the group's growth, sales growth slowed from the mid-teens to being "marginally positive" between the first and second quarters.
Cartwright emphasised that this slowing of growth would not necessarily mean that sales would decline in following periods. "It's recognising we're against strong comparatives in the previous period in the previous year."
However, Cartwright is not yet willing to predict when sales growth will begin to accelerate again. "I don't think we can call out 'when the brakes may come off', but the team are very alert, and they're planning conservatively, and it's not for us to call how fast that might recover," she said.
Investec analyst Bethany Hocking said the results offered an "overall feeling of slight relief". Following the company's profit warning last month, which said retail sales were flat at the 10-week stage of the second quarter, the overall result was an increase of 1%, "implying circa 4% growth over the last three weeks," she said.
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