Burberry UK sales fall as luxury tourist spending spree comes to an end
Comparable sales fell by a “high single-digit percentage” as the trench-coat maker failed to match last year’s impressive results.
Luxury fashion house Burberry has revealed a fall in UK sales over the final three months of 2017 as it saw the end of a boom in tourist spend from the Brexit-hit pound.
The trench-coat maker said comparable sales in the UK fell by a “high single-digit percentage” in the Christmas quarter as it failed to match last year’s impressive performance, when sales surged 40% thanks to a spending spree by overseas shoppers taking advantage of the weak pound.
Group-wide like-for-like store sales rose by 2% thanks to better trading in mainland China and the Americas region, although it was lower than the 3% expected by most analysts.
Overall retail revenues fell 2% on a reported basis to £719 million for the crucial Christmas quarter, rising 1% on an underlying basis.
Shares fell 7% after the update.
New chief executive Marco Gobbetti, who took over from former boss and long-standing creative director Christopher Bailey last year, insisted the firm was making “good progress” on revamp plans, with the firm on track for full-year profit forecasts.
He said: “We are building on strong foundations and are fully focused on the successful delivery of our multi-year plan to position Burberry firmly in luxury and deliver long-term sustainable value.”
The trading update comes after the recently-appointed boss sparked a shares plunge in November as he unveiled a strategic overhaul that will see the group focus more on high-end luxury shoppers.
The revamp includes moves to shut some wholesale sites and refurbish stores, which could see it ditch some outlets in department stores and shut those not in the right location.
Investors baulked at the costs of the plan, at the time sending shares falling the most in five years.
Burberry said in its latest update that it was on track to deliver cost savings of £60 million in the current financial year.
Steve Clayton, a fund manager at Hargreaves Lansdown, said: “If Mr Gobbetti succeeds in repositioning Burberry to be one of the world’s most aspirational brands, the returns could be impressive. For now though, it is wait and see.”
Burberry said sales in the final quarter of 2017 saw fashion perform well as new products went down well with customers, with good early results for its “full look” range, with tops, skirts and trousers selling well.
It is preparing for new bag launches from spring.