Burberry shares jump 6% as British luxury retailer sees strong growth in China
Burberry revealed business in Asia is back on form as it beat City forecasts with a strong Christmas sales performance today
Wednesday 15 January 2014
Burberry shares jumped more than 6 per cent as the 158 year old British luxury brand posted 14 per cent rise in third quarter sales to £528 million.
Chinese sales growth was back in double digits, allaying fears that the region is experiencing difficulties. Sales were boosted by a slightly earlier Chinese lunar new year with shoppers buying gifts ahead of the period.
Finance director Carol Fairweather said: “We have a gifting programme to target Chinese consumers wherever they may shop.” The group has used the Chinese year of the horse to market its brand and Fairweather added: “The Prorsum equestrian Knight is of course our emblem. We have a marketing campaign in place for Chinese lunar new year and the year of the horse.”
The figures were also boosted by growing digital sales but footfall in stores was weaker. Comparable sales edged below the first half of 13 per cent, down to 12 per cent.
Luca Solca, head of luxury at Exane BNP Paribas, said: “I believe Burberry benefits from self-help in China, as it is refurbishing and relocating the stores it inherited from its former master franchisee. It also benefits from its leading position in digital, where we see continuing material growth.
"But Burberry is pointing out that stronger top line growth required stronger investments, which is likely to have an impact on achieved operating margins.”
Outgoing chief executive Angela Ahrendts, who will leave by the summer to join Apple and will be replaced by current chief creative officer Christopher Bailey, said: “In the all-important festive period, we are pleased with our 12% comparable sales growth.
"This performance reflects continuing strong brand momentum… supported by a planned increase in investment in marketing, customer service offline and online and our retail portfolio.”
The brand opened a new beauty store called the Beauty Box in Covent Garden before Christmas which is part of its strategy to “merge fashion and beauty” and it may roll out this concept further.
Its menswear business was also growing strongly, with accessories a key growth area for the brand.
The group did warn that the continuing strengthening of sterling may create “ headwinds” later in the year due to exchange rates from sales in dollar denominated countries. Ahrendts said “the macro environment remains uncertain.”
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