Burberry Revenue Climbs 17% in Q1 as Chinese Demand Surges
LONDON — A strong rebound in China and a robust performance in Asia Pacific overall bolstered Burberry’s retail revenue 17 percent in the first fiscal quarter, the company said in a trading update on Friday.
Burberry said that in the 13 weeks ended July 1, retail revenue rose to 589 pounds from 505 pounds in the corresponding period last year, with 19 percent gain at constant exchange rates.
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Comparable store sales were up 18 percent in the first quarter with all regions outside the Americas making gains.
The numbers were in line with market consensus, and Burberry’s share price was broadly flat at 20.96 pounds in mid-morning trading.
Chief executive officer Jonathan Akeroyd said the company made “good progress” in the quarter, due partly to the recovery of mainland China following the lifting of COVID-19 related lockdowns earlier this year.
He added the outerwear and leather goods categories performed well during the period, and that Burberry was confident of achieving its full-year and medium-term guidance.
Sales in the Asia Pacific region climbed 36 percent, fueled by a 46 percent uptick in mainland China.
Burberry noted that that Chinese tourists were also splashing out while on holiday, helping to drive sales in the south Asia Pacific, which were up 39 percent. Travelers also spent their money in Japan, which saw an increase of 44 percent in retail revenue.
South Korea remained robust with growth of 6 percent, broadly in line with last year.
EMEIA, which covers Europe, the Middle East, India and Africa, also benefited from tourist spend, with overall sales up 17 percent.
The Americas continued to lag behind other regions with sales decreasing 8 percent.
As reported in May, the Americas were a drag on Burberry’s fourth-quarter numbers, with retail sales down 7 percent. The brand’s entry-price customers have been snapping shut their wallets amid economic uncertainty and a cost-of-living squeeze.
In May, Burberry said the region will encounter easier comps as 2023 unfurls, with Akeroyd asserting that the brand is “well positioned” in the market.
Burberry added that core categories of outerwear and leather goods performed well, with outerwear comparable store sales up 36 percent, led by heritage rainwear.
Comparable store sales of leather goods rose 13 percent as the brand continues to build and diversify the category under its new chief creative officer Daniel Lee.
The company is maintaining its current fiscal-year guidance of low double-digit growth in fiscal 2024, and around 20 percent adjusted operating margin at constant exchange.
Based on foreign exchange rates effective as of June 29, the company said it is expecting a currency headwind of around 150 million pounds to revenue, and around 70 million pounds to adjusted operating profit for the 2023-24 fiscal year.
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