Burberry Sales Rise By 10% Thanks to Europe
Burberry has announced that its sales for the first fiscal quarter (ended June 30) increased by 10% to 407 million pounds, thanks to the strong demand in Europe.
These revenues are broadly in line with the analysts estimations, although comparable sales (those occurring in stores opened more than a year) grew by 6% in the quarter, slightly better than analysts expected though is its worst figure since mid-2013.
The results include several surprises, most of them positive. First, analyst had lot of respect to the potential sales fall in Hong Kong and to what extent this decrease could be compensated in other geographical areas. The results show that Burberry has itself been able to offset the 10% decline in sales in the former British colony, thanks to its good results in Europe -mainly France, Italy and Spain- as well as in the Middle East, India and Africa.
Another worrying aspect for experts was the impact of the strength of the pound in the results. The company has successfully navigated by taking measures such as lowering prices in China and increasing them in Europe. Now the company hopes to close the year with a positive impact of 20 million pounds due to changes in exchange rates, double what they expected at the beginning of the year.
Meanwhile, UK’s largest luxury goods maker will review its network of 17 stores in Hong Kong after the decline of sales. The intention of the company is to reduce costs, mainly by revising rents. In any case, Burberry has made it clear that rules out any major measure in its business in Hong Kong, as it is still profitable.
Burberry shares rise more than 10% in the last twelve months, although its evolution so far this year has been rather negative, partly because of the analysts, who have conducted about 30 downgrades since April versus only three upward revisions. In any case, the average price target is 20% above the current price, at 1,865 pence. Today the company is worth €10 billion.
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