Burberry ‘Vigilant’ as Fourth-Quarter Sales Trail Estimates
Burberry Group Plc (BRBY), the U.K.’s largest luxury-goods maker, reported fiscal fourth-quarter sales that trailed analysts’ estimates and said it remains vigilant as growth slows in Europe.
Revenue from continuing operations rose 16 percent to 453 million pounds ($719 million) in the three months ended March 31, the London-based company said today in a statement. The average of four analysts’ estimates compiled by Bloomberg was 459.8 million pounds. The stock fell as much as 4.9 percent.
Burberry contrasts with LVMH Moet Hennessy Louis Vuitton SA (MC), which said this month that demand is accelerating even as economic growth slows in China and Europe’s debt crisis weighs on consumer spending. The trench coat maker’s quarterly revenue gain was driven by the U.K., France and Greater China and follows a 21 percent increase in the last three months of 2011 on an underlying basis.
“We remain vigilant about the external environment,” Chief Executive Officer Angela Ahrendts said in the statement. “Our global teams continue to focus on optimizing our core brand, digital and cultural initiatives, while investing to drive sustainable, profitable growth.”
Sales gained 15 percent excluding currency swings. Revenue growth slowed in Europe due to a shift in the timing of wholesale deliveries, while sales in the Americas were affected by the closure of some third-party accounts, Burberry said.
Burberry shares fell 4.2 percent to 1,519 pence at 8:32 a.m. in London trading, giving the company a market value of 6.6 billion pounds.
Retail sales rose 23 percent in the quarter. In Europe, they were “modestly better” in the fourth quarter compared to the third, Chief Financial Officer Stacey Cartwright said on a call with reporters.
Wholesale revenue fell 2 percent and licensing revenue dropped 1 percent, the company said. Wholesale revenue growth matched Burberry’s forecast in the fiscal second half. Sales rose the most in the Asia-Pacific region, the company said.
Burberry is “relatively well positioned in either a benign economic outlook or under more testing economic conditions,” Helen Brand, an analyst at Barclays Capital in London, wrote in a report last month. She has an overweight recommendation on the stock.
The company said it plans a 12 percent to 14 percent increase in average selling space in the year ended March 31 2013, opening about 15 mainline stores, mostly in emerging markets and cities with high tourist flows. It also expects mid- single digit percentage growth in wholesale revenue for the first half, while full-year licensing revenue should be “broadly unchanged.”
Discussions continue between Burberry and Interparfums regarding the potential establishment of a new operating model for the fragrance and beauty business, Burberry said.
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