Burberry strips down to lower revenue forecast
By Michael Northcott Tuesday, 15 January 2013
Woes across the Channel have forced luxury fashion retail Burberry to cut its second-half revenue forecast for 2012.
Despite the retail chain reporting encouraging Q3 results from last year, it looks like its fortunes have not improved much since it was forced to issue a profit warning last year. It does not expect to do as well as previously thought in its H2 figures.
The firm, which is a constituent of the FTSE 100, did report on Tuesday that sales for the final three months of 2012 were up 7% to £613m compared with the same period the previous year. This was comfortably in excess of the £602m expected by analysts. And, while we’re on the upside of the news, the chain saw retail sales from stores that have been open for at least a year rise 6% during the period.
But if you include other outlets that are not Burberry-owned and take the actual wholesale figures, revenues dropped 7%. The firm’s chief financial officer, Stacey Cartwright, blamed the wholesale drop on ‘mom-and-pop, owner-run, multi-brand shops’ in other eurozone countries where there has been limited access to credit.
Analysts had been expecting figures to stay flat, but now the firm is admitting that there will be a small fall in revenues for the period. It is not alone: many other luxury brands have been having a hard time since the explosive growth of the middle classes in India and China slowed in the last 12 months. Not to mention that the eurozone remains an economic disaster area in perpetuity…
Still, give the chain a chance, as plans afoot could put in on a much safer course in the next 12 months. Global expansion has already seen seven stores open in the Q3 period, including a flagship outlet in Chicago.
‘We expect the external global environment to remain challenging but see continued opportunities to drive productivity in our existing business, while investing for growth in under-penetrated regions,’ said Angela Ahrendts, the group’s chief executive.