Burberry shares fall by 6%
Burberry shares fall by 6%
BBC news has reported that Burberry shares fell by 6% on 19 March 2017 despite its like-for like retail sales rising by 3% in the second half of the year. Burberry’s fall has come despite a positive trading update that saw its second-half revenues rise 19% to £1.3 billion, thanks to the weakness of the pound since the UK’s vote to leave the EU.
However, growth slowed in the final three months and sales fell in the “highly promotional” US market. American shoppers have been taking advantage of the strong dollar to buy abroad, but that has hit demand in the US itself.
Like-for-like retail sales, which strip out stores open for less than a year, rose by 3% in the third quarter, but by only 2% in the final quarter up to 31 March.
However, overall total revenues, which include its wholesale and licensing revenues, fell by 1% to £1.6bn after the impact of favourable currency moves was stripped out.
Earlier this month, Burberry announced it was going to stop developing its fragrance and cosmetics in-house and instead franchise the business to US cosmetics group Coty. That decision was a key reason for the fall in wholesale revenues, as the group has been running down its stocks of beauty products. A day after the Coty announcement was made, Japanese personal care company Shisheido announced that it would end its global distribution agreements with Burberry.
Burberry’s chief executive, Christopher Bailey, said “In an uncertain environment, we continue to take action to strengthen the brand and reposition Burberry for growth.”
Burberry has plans to open a new £50 million manufacturing and weaving plant in Leeds and relocate staff from its existing Castleford and Keighley sites. However, in the wake of Brexit the opening of the new facility might be delayed, as the company considers the implications of the referendum.
However, the company said on 19 April 2017 that there was no change to its “commitment to manufacturing in Yorkshire”, but it is “taking a moment to think through” the plans.
Burberry shares fall by 6%
