Burberry Retail Sales Slump as Company Continues to Reposition the Brand

Retail revenue at Burberry dipped 1 percent to 711 million pounds in the third quarter at reported exchange rates (2 percent at constant exchange rates).

Comparable store sales were up 1 percent in the leading up to 13 weeks to Dec. 29., with consistent performance across all regions, according to the brand. Chief creative officer Riccardo Tisci’s first collection will begin landing in shops at the end of February.

“I am pleased with our progress in the quarter as we continued to build brand heat around our new creative vision and shift consumer perception of Burberry,” said Marco Gobbetti, chief executive officer. “Excitement is growing ahead of next month’s launch of Riccardo’s debut collection.”

Gobbetti said Burberry would continue to manage the business dynamically “as we reposition the brand,” and he confirmed its full-year outlook.

The company said the 1 percent uptick in same-store sales was due to a consistent performance across all regions, with Asia-Pacific benefiting from Mainland China, which was up in the mid-single digits.

The Europe, Middle East, India and Africa region logged a “small improvement” in tourist spending compared with Q2, while the Americas region was impacted by “softer” footfall trends, Burberry said.

Retail space shrank by 1 percent, with two net closures in the quarter. The company said that wholesale clients responded positively to Tisci’s commercial product lines as the brand built “heat” through its festive campaign, Vivienne Westwood collaboration and logo B-Series product drops.

The company stressed that at this stage of its transition, it is navigating the business between “the new branding and vision for Burberry” and the previous in-store collection “that does not yet reflect our new positioning.”

The company maintained its guidance of “broadly stable revenue and adjusted its operating margin at constant exchange and the delivery of 100 million in cost savings.”

In the first half, revenues dipped 3.4 percent at current exchange rates and 2 percent at constant exchange to 1.22 billion pounds.

Stripping out the impact of the beauty business, which was formerly in-house and is now a license with Coty, revenues in the six months were up 3 percent at reported exchange and 4 percent at constant rates.

Profits shot up 42 percent to 132 million pounds as Burberry kept a lid on costs and saw unexpectedly strong wholesale revenue growth.

This story was reported by WWD and originally appeared on WWD.com.

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