Lights and shadows on Burberry’s quarter: data are ok, but there is a lot of stress

Luci e ombre sul trimestre di Burberry: dati ok, ma quanti stress

Lights and shadows on Burberry’s quarter. The lights concern the fact that the British brand closes a positive third quarter. And above all, it improves the prospects for the entire fiscal year. Shadows, however, emerge from the judgments of financial analysts. According to them, the global market is currently under stress, which cannot avoid influencing Burberry’s balance sheets. For example: sales in Hong Kong halved, retail in China threatened by the virus, and the static nature of the US market.

The third quarter

Burberry closed the third quarter of the 2019-2020 financial year on December 28, 2019 with retail sales at 719 million pounds. Growing by 1% per year at current exchange rates and +2% at constant exchange rates. Comparable sales, on the other hand, increased by 3% thanks to the new collections by Riccardo Tisci. Which, as the CEO Marco Gobbetti has specified, “now represent 75% of the items for sale”. In light of the third quarter results, Burberry has improved its outlook for the entire year. Now it expects “low single-digit” sales growth. While the previous estimate indicated stable sales.

Products and markets

On a product level, Burberry highlights the growth in clothing, while “accessories have benefited from a more complete leather goods offer”. Geographically, China grew by about 15% (percentage calculated by analysts), offsetting the halving of sales in Hong Kong. Well in Europe, flat the Americas.

Fears

Burberry has focused heavily on the Chinese market (the Shanghai fashion show in April 2020, the expected opening of a boutique in Shenzhen and other initiatives) whose results could be curbed by the Coronavirus epidemic. The situation in Hong Kong, where the British brand has halved its sales, does not seem to improve. According to analysts, however, the British brand’s inability to benefit from the generalised good performance of the American market was even more worrying.

Image burberry.com

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