Burberry (LSE: BRBY) has released its first-quarter results, showcasing increased sales across most of its global regions and boosting retail revenue.
In the 13-week period ending on July 1, the company reported an 18% rise in overall sales in existing stores compared to the same period last year. This growth was driven by positive performances in various divisions worldwide.
Excluding Mainland China, the group achieved an 11% uptick in sales in existing stores. Within this segment, Europe, Middle East, India, and Africa experienced a 17% surge, South Asia Pacific exhibited a 39% growth, Japan displayed a significant 44% rise, and South Korea observed a modest 6% increase. However, the Americas division stood out with an 8% decline in comparable store sales.
The fashion house also reported a strong recovery in Mainland China, where sales in existing stores skyrocketed by 46%.
As a result, first-quarter retail revenue for the group amounted to £589 million, reflecting a 17% increase from £505 million in the previous year. At constant exchange rates, the growth reached 19%.
Burberry highlighted the outstanding performance of its core categories, specifically outerwear and leather goods. Sales of outerwear in existing stores surged by 36%, driven by the popularity of heritage rainwear. Similarly, leather goods experienced a solid growth of 13% in comparable store sales.
The company explained that all regions, except the Americas, witnessed growth, with Mainland China recovering from the Covid-19 related lockdowns of the previous year. EMEIA (Europe, Middle East, India, and Africa), Japan, and South Asia Pacific exhibited strong double-digit growth, more than compensating for the declines observed in the Americas.
Burberry continued to invest in the brand and product during the quarter, with the new visual expression of Burberry contributing to the strong performance of outerwear, particularly the heritage rainwear. Sales of leather goods also achieved double-digit growth, with women’s bags, especially the Frances shapes and vintage Burberry Check line, performing well. The company expressed excitement about the upcoming launch of the debut runway collection by Chief Creative Officer Daniel Lee in stores in September, anticipating further success.
Burberry maintains its guidance for the current year, aiming for a compound annual growth rate in revenue of high single digits, based on the financial 2020 baseline. This equates to a low double-digit growth rate in the current financial year of 2024. Additionally, the company targets an adjusted operating margin of around 20% at constant exchange rates from financial 2020.
Despite these positive expectations, Burberry anticipates a currency headwind of approximately £150 million in revenue and around £70 million in adjusted operating profit, based on forex rates as of June 29. The company remains committed to its medium-term revenue target of £4 billion.
