Burberry reported 3 percent underlying revenue growth in its first quarter led by new CEO Marco Gobbetti, helped by stronger demand in mainland China and a continuing good performance in its home British market.
Gobbetti said on Wednesday he was pleased with the group’s performance in the first quarter, while he was mindful of the work still to do. The company reported retail revenue of 478 million pounds ($612.7 million) for the three months to end-June.
Burberry said the US remains a big challenge, as do parts of Europe and the Middle East, and footfall in some regions has weakened.
The brand’s strength in Mainland China drove improved growth in Asia Pacific. The company’s sales grew in a mid single-digit percentage there with Hong Kong continuing to improve (although the lack of specific figures here suggests it remains less buoyant than the company would like). Korea also remained challenging “impacted by the macro environment”.
A booming UK market, which has benefitted from the weak pound, spearheaded the EMEIA region where growth was a high single-digit percentage. However, there was a slightly worrying note as Burberry said it saw “a deceleration towards the end of the quarter,” which is something analysts might want to hear more about later.
And there was weakness in some areas of Continental Europe such as Italy, while the Middle East remained challenging, with the firm repeating its comment about it being “impacted by the macro environment”.
E-commerce continued to be a strong point with direct-to-consumer continuing its growth (but we weren’t told by how much) and mobile now 40% of the mix. In this area, China revenues more than doubled compared to the prior year and the firm’s WeChat reach tripled through its key influencer campaign behind its popular new bag the DK88. Following its successful soft-launch in the UK last year, the customer App is now live in five markets.
For the future outlook, the company cautiously upbeat with an emphasis on the word caution. For a start, it doesn’t appear to have any ambitious store opening plans for this financial year and “will focus on productivity from its current store footprint”.
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