UK: Burberry warns of FY currency headwinds hit
Burberry said currency headwinds could negatively hit its annual profits by GBP55m
British luxury brand Burberry has warned that exchange rates could weigh on full-year profit, despite booking a double-digit increase in first-quarter retail sales.
The company said the rising strength of the pound could impact its annual profits negatively by GBP55m (US$94.2m) if exchange rates remain the same.
In the first trading update with new chief executive Christopher Bailey in control, the company said underlying retail revenue jumped 17% to GBP370m during the three months to 30 June. On a reported basis, retail revenues were up 9%. Comparable sales increased 12%, driven by planned investment.
Asia Pacific and the Americas regions enjoyed double-digit comparable store sales growth, while Europe, Middle East, India and Africa (EMEIA) reported a low single-digit increase.
"This first quarter performance reflects our focus on striving to give customers the best possible experience of the Burberry brand through ongoing investment in retail, digital and service, both on and offline," Bailey said.
"With great brand momentum and a focused vision, we remain confident of delivering sustainable, profitable growth into the future," he later added.
Charles Stanley Research analyst Sam Hart said although significant foreign exchange headwinds and the move of Japanese operations from a licensing model to a fully owned and operated model are likely to "act as a brake on growth in 2015/16", underlying profit growth will "remain healthy" in both years.
"We expect global demand for luxury goods to remain reasonably buoyant over the medium term, given our expectation that the global economic environment will continue to slowly improve and our belief that luxury goods is a long term structural growth market."
And Burberry appears "particularly well positioned" to benefit from the trend, according to Hart.
Richard Hunter, analyst at Hargreaves Lansdown Stockbrokers, is also positive about the results. "Today's update is showing signs of blowing away some cobwebs from Burberry's recent chequered history.
And although the company's share price has been weak, updates like this will "continue to exert positive pressure on the market consensus which, for the moment, remains anchored at a strong hold", he added.
Far Eastern New Century Corp, one of Tawian's leading textile conglomerates, is planning to invest TWD10bn (US$323m) to set up an integrated production site for yarn, fabrics, dyeing and apparel in Vi...
Canadean's "Stella International Holdings Limited - Company Capsule" contains in depth information and data about the company and its operations. The profile contains a company overview, key facts, ma...
A concentration of Chinese counterfeit businesses in several Italian provinces associated with the textile and apparel industry have been identified, a new report show....
- US fashion firms share their sourcing strategies
- Cost biggest barrier to Bangladesh RMG remediation
- How apparel retailers should react to Brexit
- Britain votes for Brexit – what happens next?
- Lies and statistics – the sustainability version
- Ten key trends in apparel and footwear markets
- Bangladesh firm comes top in World Textile Awards
- Columbia rain jacket a milestone in sustainability
- Myanmar factories prepare for compliance training
- ILO decent work in global supply chains criticised
- Southeast Asia strategic sourcing review – a focus on Cambodia, Vietnam and Myanmar
- Primark Stores Limited: Retailing - Company Profile & SWOT Analysis
- Clothing & Footwear Retailing in Indonesia– Market Summary & Forecasts
- Clothing & Footwear Retailing in China – Market Summary & Forecasts
- Nike Inc in Apparel and Footwear (World)