Burberry Reports Stronger Full-Year Profit as U.S. Sales Growth Returns
16 Mayo 2018 - 4:49AM
Noticias Dow Jones
By Saabira Chaudhuri
Burberry Group PLC (BRBY.LN) reported stronger profits for the
fiscal year, helped by a return to sales growth in the U.S. in the
second half, amid signs that a turnaround engineered by its new
chief executive may be starting to bear fruit.
Burberry is in the midst of a turnaround effort led by Marco
Gobbetti, the former head of Celine, a small, ultra-luxury brand
owned by LVMH Moet Hennessy Louis Vuitton SE (MC.FR). Under Mr.
Gobbetti the brand has been pulling out of undesirable locations,
pushing up prices in some areas, refining its product range,
cutting costs and refreshing its brand in a bid to become what he
describes as "firmly luxury."
Overall, for the year ended March 31, the luxury fashion
retailer made a profit of 413.0 million pounds ($558.6 million) up
from GBP394.8 million the year earlier. Revenue fell 1% to GBP2.73
billion from GBP2.77 billion, hurt by lower revenue from Burberry's
beauty business which it sold to Coty Inc. (COTY) in October.
Same-store sales rose 3%, helped by sales of a lightweight trench
coat and a "car coat" it says sold well with men.
Burberry announced a GBP150 million share buyback.
The London-based company is looking to become a bigger player in
bags, a high-margin area that's a major focus for brands like
Prada, Louis Vuitton and Gucci, which have all been selling new
shapes and lines this year.
Leather goods currently make up just 20% of Burberry's revenue.
By comparison handbags make up about 75% of sales at Louis Vuitton,
45% at Prada and 40% of Gucci, according to Bernstein.
"We see leather goods and building out the architecture of our
handbags as a critical part of our strategy," said Chief Financial
Officer Julie Brown on a call with reporters.
Burberry in March began selling a belted tote bag it says was
influenced by its trench coats, and is now rolling out smaller
sizes to appeal to its core Chinese customers. The bag was made by
an Italian leather goods firm that Burberry agreed to buy earlier
this week saying the investment will allow it to accelerate its
handbag offerings.
Burberry has also overhauled its senior management in recent
months, naming a new creative head in former Givenchy designer
Riccardo Tisci, a new U.S. head and a new chief commercial officer.
Its long-time chairman John Peace will resign in this summer.
In the U.S., which accounts for more than a fifth of Burberry's
global revenue, the company said performance had improved.
Same-store sales at retail stores, which make up 80% of Burberry's
U.S. sales, grew in the second half of the year.
"In retail in the U.S. we are seeing some very encouraging
trends," said Ms. Brown.
However Burberry continues to struggle at American department
stores, saying wholesale revenue in the U.S. declined by a high
single-digit percentage in the year as it consolidates locations
within some department stores. Ms. Brown said Burberry is still
negotiating with department stores, which have historically marked
its product down when not selling, sparking disagreement with the
company which says such moves hurt the brand.
Burberry has pulled back on physical-store expansion as it works
to improve sales per square foot. In fiscal 2018, it closed a net
20 stores in the fiscal year and now has 449 stores. For the
current fiscal year, the company expects the pullback to hit retail
revenue by 1%, saying it plans to continue to close and relocate
stores.
Maryam Cockar contributed to this story
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
May 16, 2018 05:34 ET (09:34 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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