Shares in Burberry strutted higher on Friday as the company announced better-than-forecast sales for the end of 2024.
At £12.38 per share, the FTSE 250 fashion house was last dealing 15.7% higher in end-of-week trading.
Sales continue to fall at embattled Burberry but at a lesser rate than analysts had predicted. Retail revenues were down 7% in the three months to December, to £659 million. This was down 3% at stable exchange rates.
Comparable store sales were down 4% year on year. Market consensus had suggested a fall of around 12%.
Asia Leads The Drop
Poor demand in Asia Pacific continued to drive Burberry’s top line lower. Regional revenues were down 9%, with sales in Mainland China tumbling 7%.
Sales in the Europe, Middle East, India, and Africa (EMEIA) territory dipped 2%, though in The Americas turnover ticked 4% higher year on year.
Burberry said that its ‘It’s Always Burberry Weather’ outerwear campaign and ‘Wrapped in Burberry’ festive campaign “[had] resonated with a broad range of luxury customers leading to an improvement in brand desirability and strength in outerwear and scarves.”
Best Foot Forward
Chief executive Joshua Schulman commented that “since launching Burberry Forward in November, we have moved at pace to advance our strategy to reignite brand desire, improve our performance and drive long-term value creation.”
Burberry Forward — which aims to rejuvenate the brand, improve outerwear sales and increase store productivity — was launched in autumn when the firm announced a 20% slump in first-half comparable store sales.
Schulman added that “the acceleration of our core categories reinforces our belief that Burberry has the most opportunity where we have the most authenticity and that our strategic plan will deliver sustainable, profitable growth over time. However, we recognise that it is still very early in our transformation and there remains much to do.”
“Some Signs Of Brightness”
Observing that there are “some signs of brightness for the troubled company,” analyst Garry White of Charles Stanley noted that management are now expecting second-half trading to broadly offset the first-half adjusted operating loss.
However, he also said that Burberry still has obstacles to overcome. He commented that “the company has been left with too much stock to discount and this lack of scarcity has been damaging the brand as well as a lack of focus on its core outerwear category.”
White added that “[while] Mr Schulman also said the company had all it needed to ‘reignite brand desire’… with sales lower year on year in all regions but the Americas, there is little evidence of this emerging so far.”
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