Announcing preliminary results for the 52 weeks ended March 30, 2019, Burberry Group Plc said, revenue excluding beauty wholesale increased by 2 percent CER and 2 percent reported to 2,720 million pounds (3,492 million dollars). Total revenue of 2,720 million pounds was down 1 percent CER and flat reported. Comparable store sales for the year under review improved 2 percent, while wholesale sales excluding beauty rose 7 percent at CER. Adjusted operating profit of 438 million pounds (562 million dollars) was flat at CER, and down 6 percent reported. Gross margin was down 100bps.
“We made excellent progress in the first year of our plan to transform Burberry, while at the same time delivering financial performance in line with expectations. Riccardo Tisci’s first collections arrived in stores at the end of February and the initial reaction from customers is very encouraging. The implementation of our plan is on track, we are energised by the early results and we confirm our outlook for FY 2020,” said Marco Gobbetti, Chief Executive Officer of Burberry in a statement.
Burberry added that adjusted operating margin of 16.1 percent was up 10bps at CER, and down 100bps reported, while reported operating profit of 437 million pounds increased 7 percent after adjusting charges of 1 million pounds. Adjusted diluted was EPS 82.1p, up 7 percent CER, flat reported supported by an effective tax rate reduction of 200bp and 7million share repurchases, while reported diluted EPS of 81.7p, was up 19 percent reported.
Confirming its outlook for the year ahead, Burberry said it expects broadly stable revenue and adjusted operating margin at CER in FY 2020. Burberry added that as planned, it anticipates a more pronounced weighting of operating profit in H2 relative to H1 in FY 2020 than in the prior year. The company also announced full year dividend per share up 3 percent to 42.5p, in line with progressive dividend policy.
Comparable store sales in Asia Pacific witnessed a low single digit percentage growth with Mainland China delivering low single digit percentage growth, with a stronger second half due to the shift of Chinese spending away from other Asian tourist locations. Hong Kong, the company said, was broadly stable with softer trends in the second half, Korea increased low single digits benefiting from growth in local consumption as well as exceptional spending from travelling Chinese consumers in the first half of the year and Japan declined by a low single digit percentage impacted by softer tourist flows towards the end of the year.
Comparable sales in the EMEIA region improved low single digit with the UK delivering mid-single digit percentage growth, benefiting from improved tourist spending in the second half. Continental Europe grew low single digit and the Middle East declined, impacted by the macro-environment. Comparable sales in the Americas were also up low single digit with the US growing by a low single digit percentage with the second half negatively impacted by softer local footfall trends.
The company continued to upgrade retail distribution network, closing a net 18 stores including seven mainline, nine concessions and two outlets, while store openings included the relocation and expansion of its Dubai flagship and openings in Shin Kong Place, Xian (China).
Wholesale revenue improved 7 percent excluding beauty at CER and 8 percent reported. In October 2017, Beauty transitioned from a wholesale business to a licensed partnership with Coty. Including the impact of this change on the company’s H1 2019 results, full year total wholesale revenue decreased by 8 percent at CER and 7 percent reported. Licensing revenue of 46 million pounds (59 million dollars), rose 53 percent at CER and 54 percent at reported, benefiting from beauty transitioning from a wholesale to licensed business model. Excluding the impact of beauty, Burberry said, licensing declined 3 million pounds due to the non-renewal of the watch licence with Fossil.
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