Luxury fashion label Burberry has seen underlying total sales jump eight per cent in its first quarter to £883 million as it seeks to recover from a disappointing performance earlier in the year, it has been announced.
In its trading update for the first half, the group reported that like-for-like sales grew three per cent as underlying retail revenue climbed 10 per cent to £577 million, although trading in the UK and China slowed over the quarter.
Despite a “modest improvement” across its international operations since last month’s profit warning, the British brand noted that the primary cause of the sales decrease was footfall which was “mitigated by higher average transaction values.”
Angela Ahrendts, Burberry’s CEO, said of the results: “In a more challenging external environment, footfall declined but brand momentum remained strong, particularly with our higher spending luxury consumer.
“Our highly experienced team remains very focused on the consistent execution of our key strategies, engaging consumers through innovative retail and digital marketing initiatives as we enter the most important quarter of the year.
“We continue to invest for long term growth in flagship and emerging markets, while tightly controlling discretionary spend.”
LFLs were unchanged across Europe and the Americas over Q2 as Hong Kong France and Germany each maintained strong performances seen earlier in the year.
During the first half, Burberry opened 13 mainline stores and closed seven, meaning that average selling space increased by 12 per cent and the majority of focus fell on the label’s flagship store opening on London’s Regent Street.
Upcoming openings include stores in Chicago, Shanghai, Brazil, Mexico and the Middle East as well as a standalone menswear store in Knightsbridge, London.
While there has been a slowdown in trading throughout the year, it is hoped that the upcoming festive season will ease pressure on the group though Jaana Jatyri, CEO of Trendstop.com, believes that this trading update will not have dissipated fears arising from last month’s profit warning.
She commented: “”Naturally, the longer the global economic crisis goes on, and the deeper it affects emerging markets in particular, the more exposed Burberry will be.
“The emerging markets have proved to be a double-edged sword for Burberry.
“Yes, there is money in the emerging markets but newly acquired customers can also be more fickle than those in the established territories where wealth is arguably more stable.
“The fact that Germany and France have proved particularly robust for Burberry underlines this fact.
“If Burberry can cope with the current turbulence, it will be tremendously well positioned in the medium to long-term.Burberry needs to survive the widespread belt-tightening among even wealthier demographics and there’s no reason to believe it won’t.
“I still believe the longer term future of Burberry remains bright. It is an innovative, forward-looking brand, as shown by its recent investment in creating digitally-enabled stores of the future.”