LONDON-Burberry Group PLC reported flat same-store sales growth for its fiscal third quarter as the British fashion house continued to feel the impact of lower luxury spending in Hong Kong and Macau, and said outerwear sales were affected by warm weather. Retail revenue rose to GBP603m, up 1% underlying and unchanged at reported FX.
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Burberry shares rose following the results, which were in line with expectations and eased concerns of a fall in Chinese demand, which has hit peers Gucci and LVMH. If the troublesome market of Hong Kong and Macau were stripped from the numbers, sales would have been up 3%.
Economic uncertainty in China means Burberry has suffered in the past year from a drop in demand for luxury goods from Chinese shoppers, who account for 30 to 40 percent of its global revenue. The company, however, cautioned that the outlook for the luxury goods sector remained uncertain. Although this was better than the second quarter, when sales dipped by 4 per cent, Burberry admitted it was below its “internal assumptions”.
The company anticipated in October a return to growth in last part of 2015, driven in part by new products such as lightweight cashmere trenchcoats and ponchos, and new styles of scarves.
“The improvement in mainland China could be because the would-be tourists are buying more at home, but it could also be that the market there has finally bottomed out”, Zuzanna Pusz, an analyst at Berenberg, told Bloomberg.
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Profits for the full year are likely to be £425mln, supported by £10m of currency benefit and the additional cost cuts.
