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.
Burberry Group plc (BRBY) - Financial and Strategic SWOT Analysis Review provides you an in-depth strategic SWOT analysis of the company’s businesses and operations. The profile has been compiled by G...
This report provides information, analysis and valuable insight on developments relating to the global apparel industry in the following categories: acquisitions, divestments and mergers; corporate ...
A concentration of Chinese counterfeit businesses in several Italian provinces associated with the textile and apparel industry have been identified, a new report show....
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...
The report titled “Singapore Luxury Goods Market Outlook to 2017 – Rising HNWI Population to Propel the Growth” provides a comprehensive analysis of the market size of Singapore luxury goods Industry ...
- Levi Strauss raises the bar on sustainability
- Nike reaffirms US production commitment
- Gap and H&M back Myanmar path to labour reform
- H&M faces margin pressure on dollar impact
- Can the Gap brand reclaim its iconic status?
- Myanmar minimum wage set at US$3.2 per day
- Far Eastern to invest $323m in Vietnam textile hub
- Fast Retailing supplier continues strike talks
- China cotton stockpile auction may shake up market
- Under Armour unveils newest retail presence
- Global market review of lingerie - forecasts to 2020
- World Textile and Apparel Trade and Production Trends: The EU - May 2015
- Wool in the 21st Century: new prospects for a familiar fibre
- Apparel Retail: Top 5 Emerging Markets Industry Guide
- Myanmar's Garment Sector - Opportunities & Challenges in 2015