Burberry sales surge appeases angry shareholders over Bailey's pay package
Burberry first-quarter sales increased by 12% despite a rising pound
Thursday 10 July 2014
Burberry went some way towards placating investors angered by new boss Christopher Bailey’s pay today as it shrugged off a strong pound to deliver double-digit sales growth.
Burberry will face investors tomorrow at its annual meeting where as many as 30 per cent of shareholders are set to oppose Bailey’s pay and perks package, worth up to £27 million.
But first-quarter sales increased by 12 per cent despite a rising pound which will make the British brand’s products more expensive for overseas customers, potentially impacting profit this year by more than £65 million.
Strong demand from the US and Asia helped the company report the double-digit sales rise for stores open more than a year. The shares added 26p to 1445p.
Retail sales for the three months to July reached £370 million.
Carol Fairweather, Burberry’s chief financial officer, said lower growth in Europe was due to a decrease in shopping by “mainland Europeans and Russians” who are “spending and visiting less”. However, she added that the “UK local customer is still spending”.
Burberry hosted its latest menswear fashion show last month in London and reported strong global demand for mens’ tailoring, womens’ Prorsum and trenchcoats.
Bailey, who took on the joint role of chief executive and chief creative officer in May when Angela Ahrendts left for Apple, said: “This first-quarter performance reflects ongoing investment in retail, digital and service, both on and offline. The increase demonstrates our teams’ success as we continue to concentrate on the things we can control in an uncertain external environment.”
Fairweather added that the group will ride out the currency fluctuations and had “no plans in the short term” for price changes but will monitor prices “season by season”.
Burbery opened four stores during the quarter — one in Edinburgh and three airport stores including an outlet at Heathrow — and has a series of launches planned. Its new perfume, My Burberry — modelled by Kate Moss and Cara Delevingne — and its Bloomsbury handbag will both launch in September.
The group’s beauty business, which it took control of last year, is on track to grow by about 25 per cent and plans to launch skincare products next year.
Burberry is also in the process of taking control of its Japanese business when its licence ends in June next year.
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