News Apr 30, 2017 09:56 PM EDT

Burberry posts ‘lackluster’ results

By Joyce C. Abaño

UK luxury fashion retailer Burberry has posted a lackluster set of results for its second half following an impressive result in the third quarter, a retail analyst stated.

The retailer has posted a one percent decline in total revenue for the six months ending March 31 on an underlying basis to £1.61 billion but up 14 percent at reported currency.

Retail revenue has seen a three percent increase on an underlying basis to £1.27 billion, but up 19 percent with comparable sales up three percent.

According to incoming CFO Julie Brown, Burberry's UK sales soared 90 percent in the second half as tourists flocked to the UK, taking advantage of the weaker pound.

The company also stated a recovering Mainland China market had driven growth in the Asia Pacific.

"Following the impressive results in Q3, Burberry has posted a lacklustre set of results for H2," said Charlotte Pearce, associate retail analyst at GlobalData.

Pearce said that while Burberry experienced double-digit growth in EMEIA, led by its robust performance in the UK, benefitting from the weak pound, Burberry's international performance in the second half has proved disappointing, with declining sales in Korea and the US and a challenging market in the Middle East, bringing down the brand's overall performance.

She said, however, that the retailer's plan to invest in store refits will help to increase footfall, especially in areas like Hong Kong, where trading has historically been more positive.

The luxury retailer's strong digital performance, particularly via mobile, has continued to drive growth for the brand as it maintains its reputation as a digital innovator in the luxury market.

"In an uncertain environment, we continue to take action to strengthen the brand and reposition Burberry for growth," said Christopher Bailey, Burberry chief creative and chief executive officer. "The outperformance of fashion and the strong customer response to new products underline our renewed creative momentum.

Burberry has recently partnered with beauty brand Coty which could help the retailer to leverage Coty's expertise to reposition its brand in the beauty market, which is expected to be the fastest growing market in the UK in the next five years, Pearce stated.

According to Pearce, Burberry's investment in innovation and newness has proved successful within apparel and accessories and its partnership with the beauty brand will allow the retailer to focus on its best performing product areas to drive the brand forward. 


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