TIDMBRBY
RNS Number : 4352F
Burberry Group PLC
16 July 2021
16 July 2021
Burberry Group plc
First Quarter Trading Update
Growth acceleration
"We have made an excellent start to the new fiscal year.
Full-price sales accelerated as our collections and campaigns
attracted new, younger luxury customers to the brand. We saw strong
growth across our strategic categories, in particular leather goods
and outerwear, and exited markdowns in digital and mainline stores.
We continued to roll out our new store concept that will transform
how customers experience our brand and product in a uniquely
British luxury setting. Despite the continuing challenging external
environment, we are very pleased with the progress against our
strategy. With the Company firmly set on a path of growth and
acceleration, we are confident of achieving our medium-term
goals"
Marco Gobbetti, Chief Executive Officer
-- Comparable store sales rebounded strongly, rising 90% vs LY and +1% vs LLY**
-- Within comparable store sales, full-price sales growth
accelerated to +26% vs LLY driven by new, younger clientele; exited
markdowns in digital and mainline stores globally
-- Strong growth across core strategic categories with both
full-price leather and outerwear more than doubling against LY and
triple digit in shoes.
-- Since the end of Q1, we opened our first flagship carrying
our new global design concept in Sloane Street, London, a new
customer experience in a uniquely British luxury setting; three
more flagships to follow over the next year
-- Digital full-price sales more than doubled vs LLY. Continued
digital innovation, including collaboration with Mythical Games to
launch our new TB monogram collection
-- Pledged to become Climate Positive by 2040, going beyond net
zero to set a new industry standard
Retail revenue 13 weeks ended June
26 June 27 June % change
GBP million 2021 2020 Reported FX CER*
------------------------------ ------------------ ------- ----------- ----
Retail revenue 479 257 +86% +98%
Comparable store sales* +90% (+1% v LLY) -45%
Full-price comparable +121% (+26% v LLY) n/a
store sales*
------------------------------ ------------------ ------- ----------- ----
*See page 4 for definition
**LLY is compared with Q1 FY20
Outlook
FY22 guidance remains unchanged except wholesale, which is now
expected to increase by approximately 60% YoY in H1 due to a
stronger order book and FX that we now expect to be a GBP114m
headwind on sales and GBP40m headwind on adjusted operating profit
for FY22 based on 25 June spot rates. The medium-term guidance for
high single digit top line growth and meaningful margin improvement
remains firmly on track.
The financial information contained herein is unaudited
Business review
Despite a continuing challenging environment in Q1, we delivered
further acceleration in our full-price sales, achieving +26%
comparable full-price sales growth in the quarter vs LLY. This
strong traction was evident across markets where Americas saw
full-price comparable store sales more than double, Mainland China
increased more than 55% and Korea more than 90% vs LLY. This was
driven by new, local, young customers buying across our core
categories. At the same time, we exited in-store markdown this
quarter and further reduced the weight of outlets in the mix. As a
result, our overall comparable store sales were +1% vs LLY, despite
the reduction of markdown and outlet sales, and continued
disruptions in several markets which resulted in an average 11% of
stores being closed in the period. By the end of June, the
situation had improved to only 3% of stores closed, but 35% are
still operating on reduced hours and business in Europe and much of
Asia is still heavily impacted by the significant decline of
international tourist traffic.
In terms of brand activity, in the last quarter we launched a
dedicated handbag campaign centred around our new handbag shape,
the Olympia. Featuring Kendall Jenner, FKA twigs and Shygirl, the
campaign generated an excellent response from both press and
consumers, particularly across social media where consumer
engagement on our campaign posts grew double-digit compared to our
Pocket campaign, and newsfeed posts reach and engagement grew +96%
and +58% respectively vs Pocket campaign on Instagram. In June we
launched our Men's SS22 show and collection - 'Universal Passport'.
The Show celebrated youthful positivity and the discovery of new
and unknown spaces through a presentation in the striking
Millennium Mills at the Royal Victoria Docks in East London. Again,
it resonated very well with both press and consumers, recording
double-digit growth in consumer reach vs our AW21 Men's
presentation.
Our new product collections have proven very successful, helping
attract new customers to the brand with Q1 FY22 full-price sales to
new customers growing mid 30%s vs LLY. Strategic categories have
been a particular area of strength. Leather goods full-price sales
grew double-digits vs LLY and within outerwear we saw very strong
growth in jackets, quilts and downs. We also achieved triple-digit
growth vs LLY in shoes, an important customer acquisition
category.
Turning to channels, we continued to drive appointments and
engage our customers in-store through exciting activations,
including a programme of 70 leather goods pop-ups and pop-ins in
high visibility locations. Furthermore, the roll out of our new
store concept has started at pace, with 7 stores across Asia now
under the new concept and, at the start of Q2 FY22, our new
flagship store in Sloane Street. The concept will transform how
customers will experience our brand and product in a uniquely
British setting.
In Digital, we sustained positive momentum, with full-price
sales more than doubling vs LLY. We continued to enhance product
discovery, launching our Handbag Hub on Burberry.com. We also
introduced several pilots to further strengthen the integration
between our offline and online channels, as well as a unique
digital collaboration with Mythical Games to drop our first limited
edition digital vinyl toy for the multiplayer video game Blankos
Block Party.
On 10(th) June, we set a bold new ambition to become Climate
Positive by 2040. Underpinning this pledge is a series of actions
within our value chain including accelerating our emissions
reduction target across our extended supply chain to 46% by 2030
and reaching net zero by 2040, 10 years ahead of the 1.5degC
pathway set out in the Paris Agreement. It also involves investing
beyond our value chain to help safeguard our planet for generations
to come, including programmes to protect and restore natural
ecosystems by removing carbon from the atmosphere and projects to
help communities that are most vulnerable to adapt to climate
change.
As part of our commitment to champion diversity and inclusion,
we celebrated Pride with a special film, bringing together members
of the LGBTQ+ community and their loved ones to share inspiring
stories of their experiences. We also donated to a number of
charitable organisations making a positive impact, including our
longstanding partner the Albert Kennedy Trust.
Financial performance
We have seen strong recovery in Q1 FY22 with comparable store
sales now in line with pre-COVID-19 trading despite a continuing
challenging environment, a low double-digit headwind from the exit
of markdowns compared with LY in our mainline and digital stores
and the continued reduction of the outlet business.
Significant improvement in retail comparable store sales +90% LY
and +1% LLY driven by full-price comparable sales up +121% LY (+26%
LLY). Comparable store sales by region showed:
-- Asia Pacific +27% LY (+7% LLY) with continued strong growth in Mainland China and Korea
-- EMEIA +146% LY (-38% LLY) as the business continued to be
impacted by weaker tourist footfall and COVID-19 related store
closures in Continental Europe in particular
-- Americas +341% LY (+34% LLY) with triple digit growth vs LLY
in full-price sales driven by strong traction with new and younger
clientele
Digital continued to see excellent growth with full-price sales
more than doubling vs LLY with strong growth seen in every
region.
Space growth contributed 8% to retail sales YoY while FX was a
12% headwind. In total reported retail sales grew 86% YoY.
Enquiries
Investors and analysts 020 3367 4458
Julian Easthope VP, Investor Relations Julian.Easthope@burberry.com
Media 020 3367 3764
Andrew Roberts VP, Corporate Relations Andrew.Roberts@burberry.com
--------------------------------------- ----------------------------
-- There will be a conference call for investors and analysts to
discuss this update today at 9am (UK time). The conference call can
be accessed live on the Burberry corporate website,
www.burberryplc.com with a replay available later in the day.
-- Burberry will announce its Interim results for the 26 weeks
ending 25 September 2021 on 11 November 2021
Certain statements made in this announcement are forward-looking
statements. Such statements are based on current expectations and
are subject to a number of risks and uncertainties that could cause
actual results to differ materially from any expected future
results in forward-looking statements. Burberry Group plc
undertakes no obligation to update these forward-looking statements
and will not publicly release any revisions it may make to these
forward-looking statements that may result from events or
circumstances arising after the date of this document. Nothing in
this announcement should be construed as a profit forecast. All
persons, wherever located, should consult any additional
disclosures that Burberry Group plc may make in any regulatory
announcements or documents which it publishes. All persons,
wherever located, should take note of these disclosures. This
announcement does not constitute an invitation to underwrite,
subscribe for or otherwise acquire or dispose of any Burberry Group
plc shares, in the UK, or in the US, or under the US Securities Act
1933 or in any other jurisdiction.
Notes to editors
-- Burberry is a global luxury brand with a distinctly British attitude.
-- At 26 June 2021, globally Burberry had 214 retail stores, 142
concessions, 56 outlets and 42 franchise stores, excluding pop up
stores.
-- Burberry is listed on the London Stock Exchange (BRBY.L) and
is a constituent of the FTSE 100 index. Its ADR symbol is
OTC:BURBY.
-- BURBERRY, the Equestrian Knight Device, the Burberry Check
and the Thomas Burberry Monogram and Print are trademarks belonging
to Burberry.
Constant exchange rates (CER) removes the effect of changes in
exchange rates compared to the prior period. This takes into
account both the impact of the movement in exchange rates on the
translation of overseas subsidiaries' results and also on foreign
currency procurement and sales through the Group's UK supply
chain.
Comparable store sales is the year-on-year change in sales from
stores trading over equivalent time periods and measured at
constant foreign exchange rates. It also includes online sales. The
measurement of comparable sales has not excluded stores temporarily
closed as a result of the COVID-19 outbreak.
Full-price comparable store sales are sales from items sold at
full retail price in our own mainline retail and online network. We
have described the change in full-price sales based on the year on
year change and measured at constant foreign exchange rates.
Markdown sales are from items that are sold at a discount to the
full retail price in our own mainline retail and online
network.
Store closures are based on the average stores closed due to
COVID-19 as a percentage of the estate measured daily.
Certain financial data within this announcement have been
rounded.
Appendix
At 25 June 2021 spot rates, there is a GBP40m impact of exchange
rate movements on FY22 adjusted operating profit and a GBP114m
headwind on revenue. This compares to guidance given in May for a
GBP96m headwind to revenue and a GBP34m impact to adjusted
operating profit.
Exchange rates Forecast effective rates Actual average exchange
for rates
FY22
GBP1= 25 June 2021 30 April 2021 FY21
------------ --------------- -----------------------
Euro 1.17 1.15 1.12
US Dollar 1.39 1.39 1.30
Chinese Yuan 9.00 9.03 8.85
Hong Kong Dollar 10.82 10.82 10.08
Korean Won 1,577 1,545 1,514
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END
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