Burberry’s first half revenue down

Worldwide
Published:  20 October, 2016

The British fashion brand has reported total revenue of around £1.15 million (US$1.42 million) in the first half of 2016, down 4% compared with the same period the prior year, as a result of retail growth offset by a decline in wholesale and licensing, partly reflecting the strategic brand elevation.

Retail revenue in the first half of 2016 was £859 million (just over US$1 billion), up 2% year-on-year. Comparable sales are reported to have improved in the second quarter (Q1: down 3%; Q2: up 2%), and to have remained unchanged for the half.

Wholesale revenue for luxury brand, which has completed £34 million (US$41.6 million) of the initial £100 million (US$122.6 million) share buyback program, was £287 million (US$351 million); down 14% compared with the same period the prior year. Negative growth was also registered in licensing revenue in the period; down 54% to £13 million (US$15.9 million), reflecting the planned expiry of Japanese Burberry licenses, consistent with guidance.

According to Burberry, customers have responded positively to the brand’s innovation and “newness” as marked by the sales growth in bags, led by the runway rucksack and new Buckle bag collection. A good response was also registered to the Bridle bag, the number one selling item, from the September runway collection. 

“In a challenging external environment, we continue to focus on product innovation, retail productivity and digital leadership, against a backdrop of sustained action and investment to deliver long-term outperformance of our brand and business”, said Christopher Bailey, Chief Creative and CEO, Burberry.  “We remain on track to deliver our financial goals”, he added.

A low single-digit percentage comparable sales decline was registered in the Asia Pacific region, with mainland China improving with mid-single-digit percentage comparable sales growth in the second quarter, despite the impact of the planned elevation of the store portfolio in Beijing, Burberry’s largest market in the country. Hong Kong continued to experience negative footfall throughout the half, with comparable sales down a double-digit percentage. Excluding Hong Kong and Macau, comparable sales in the region were positive in the half.  

The EMEIA (Europe, Middle East and Africa) region also delivered low sales growth in the period. Improved performance from the travelling luxury customer in the second quarter was most significant in the UK, with comparable sales up over 30%, given sterling’s depreciation. Major markets in Continental Europe remained weak, where growth from domestic customers was more than offset by declines in tourist spend.

Comparable sales for the first half was also down in the Americas as domestic customer demand remained uneven, and spend from the travelling luxury customer remained down by a double-digit percentage.  

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