Burberry posted a decline in retail comparable sales of 3%, with a similar performance in all three of its regions.

Burberry posted a decline in retail comparable sales of 3%, with a similar performance in all three of its regions.

Incoming Burberry chief Marco Gobbetti looks set to inherit weak sales across all regions, say Verdict analysts, as the UK fashion group today (13 July) revealed a fall in first-quarter comparable sales.

The comments come amid a board reshuffle announced this week that will see Christopher Bailey step back from his role as chief executive of the UK luxury fashion label and return to his creative responsibilities.

In a first-quarter trading update, Burberry posted a decline in retail comparable sales of 3%, with a "challenging" performance in all three of its regions.

Within Asia Pacific, Hong Kong showed some improvement compared to the fourth quarter, but continued to see a double-digit percentage decline in comparable sales. Excluding Hong Kong and Macau, comparable sales in the first quarter were positive.

Meanwhile in EMEIA, UK sales improved in the final weeks of the quarter, delivering mid single-digit percentage comparable growth despite a double-digit decline in sales across Europe, particularly in France and Italy. In America, sales remained down by a double-digit percentage.

Total retail revenue remained unchanged at GBP423m (US$559m) at constant exchange rates for the three months ended 30 June.

By product, in mainline, fashion outperformed replenishment as customers responded positively to innovation and newness. Digital sales also continued to perform well, growing across all regions with mobile sales delivering most of the growth, with almost 60% of all site traffic coming through via a mobile device.

"In what remained a challenging external environment, underlying retail sales were flat in the first quarter," says Bailey. "In this context, we continue to focus on managing our business with agility whilst implementing the ambitious evolution of our strategies and ways of working we outlined in May, to position Burberry for long-term growth. These plans are now well underway and on track to deliver our financial goals. This progress, together with our recent management appointments, gives us real confidence for the future."

Earlier this summer Burberry outlined an ambitious three-year plan to drive revenue growth, improve productivity and deliver at least GBP100m (US$146.2m) of cost savings in the face of falling sales and profits.

Burberry sets out growth plan amid falling profits

Gobbetti's appointment is seen as a "direct response to growing frustration with Bailey's inability to turn Burberry's poor performance around", according to Verdict analyst Andrew Hall.

Indeed, Hall says Gobetti will "inherit sales weakness across all regions." He adds that Gobbetti's experience at French fashion brand Céline, where he is currently head, will stand him in good stead but a priority must be examining the company's operations in the Far Eastern markets and considering new avenues for growth.

While Brexit is likely to benefit Burberry in the short term, as international tourists to the UK rush to capitalise on the weakened pound, Hall says Gobbetti must find a way to turn the "evolving geopolitical drama" to the company's advantage.

"Burberry's strength in digital and the continuing appeal of its brand are good foundations to work with and the clear segmentation of leadership between Bailey and Gobetti will benefit Burberry's strategic direction," he adds.

Burberry board reshuffle replaces Bailey as CEO