FX rates worsen at Burberry but underlying retail growth picks up

10th Jul 2014 07:31

- FX headwinds increase- Underlying retail sales growth picks up- Comparable sales rise 12%High end British fashion group Burberry saw underlying growth in retail sales pick up in the first quarter, but warned that currency headwinds have increased.Retail revenues totalled £370m in the three months to June 30th, up 17% on an underlying basis which excludes FX movements. This was a decent acceleration from the 13% registered in the second half of the previous financial year.However, growth on a reported basis slowed to 9% in the first quarter, from 11% in the second half.While the luxury firm maintained its full-year guidance for its wholesale and licensing revenues, it said that retail and wholesale profits would see a "material" impact if FX rates remain at current levels.While this was in line with previous comments, Burberry estimated that if it were to rebase last year's retail/wholesale profit at current rates it would be reduced by around £55m, compared with the £40m impact noted at the time of its annual results in May.Nevertheless, the firm said that the 12% comparable sales growth registered in the first quarter was in line with its expectations, driven by planned investment.The company reported double-digit growth in Asia Pacific and the Americas, and low single-digit growth in Europe, Middle East, India and Africa.Meanwhile, its three main product categories of mens, womens and accessories all delivered double-digit growth."This first quarter performance reflects our focus on striving to give customers the best possible experience of the Burberry brand through ongoing investment in retail, digital and service, both on and offline," said Christopher Bailey, Chief Creative and Chief Executive Officer.  "The 12% increase in comparable sales demonstrates our teams' success in unlocking the benefits of these investments, as we continue to concentrate on the things we can control in an uncertain external environment."BC