Burberry recovers its poise but growth still slows
Friday 12 October 2012
Burberry's shares strutted up 13 per cent yesterday after latest figures from the British luxury brand, which issued a profits warning last month, were greeted with relief. However, it revealed its sales slowdown has continued.
Last month the fashion house shocked the City with an unscheduled trading update citing a "material slowdown" in global sales, and its shares had fallen 26 per cent since then. But yesterday's first-half update showed sales at stores open more than a year rose 1 per cent in the three months to 30 September, well below previous double-digit growth, but better than the zero growth in the first 10 weeks of the quarter.
The growth was well behind its first-quarter growth of 6 per cent, with weak trade in the UK and a slowdown in China blamed.
Burberry's total first-half sales came in at £883m, up 8 per cent.
The shares jumped 133p to 1,136p, in what one fund manager described as a "relief rally".
China's slowdown, compared with more "robust" sales in France, Germany and Hong Kong, was blamed on government change and a drop in the lucrative "gift giving" ahead of this.
Angela Ahrendts, Burberry's chief executive, said: "In a more challenging external environment, footfall declined but brand momentum remained strong, particularly with our higher-spending luxury consumer."
London's poor performance was put down to the Olympics deterring luxury shoppers.
Stacey Cartwright, finance director, said: "There was a summer hiatus and London traffic was down during the Olympics. We had anticipated this and expect traffic to come back in the third quarter."
Burberry was boosted by the completion of a deal to take its perfume business in house.
Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, said: "The underlying strengths of the company, which for the moment seem to have been dismissed by investors, remain intact and today's statement shows some strong underlying growth."
But its previous growth levels appears to be a thing of the past. Rahul Sharma at Neev Capital said: "After three years of extraordinary growth, the luxury sector is seeing growth normalise as economies around the world slow."
- 2 The man who filmed the Freddie Gray video has been arrested at gunpoint
- 4 How the language you speak changes your view of the world
General Election 2015: Fishing is on Nigel Farage's mind as he casts a line to the disaffected of Grimsby
The man who filmed the Freddie Gray video has been arrested at gunpoint
Indonesia executions: Death row British grandmother Lindsay Sandiford will refuse to wear a blindfold when she faces firing squad
Oxygen-starved 'dead zones' with no marine life up to 100-miles long discovered in the Atlantic Ocean
Russian warships accused of 'chasing away' Swedish vessel to prevent Baltic States from achieving energy independence
Over 50,000 families shipped out of London boroughs in the past three years due to welfare cuts and soaring rents
EU asylum policy is 'a direct threat to our civilisation', says Nigel Farage
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: SNP and its activists 'openly racist' towards the English, Farage says
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
Schools forced to act as 'miniature welfare states' with teachers buying underwear and even haircuts for poor pupils
iJobs Money & Business
£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...
£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...
£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...
£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...