Burberry warns of exchange rate hit as sales rise
Burberry, the UK luxury fashion brand, has announced a strong rise in sales but warned that profits could be hit by unfavourable exchange rates.
Retail revenues for the three months to the end of June were £370m, up almost 10% from a year earlier, while like-for-like sales increased by 12%.
Sales were particularly strong in China and Hong Kong.
But it warned that if exchange rates remained at current levels, retail and wholesale profit could be cut by £55m.
Burberry added that, given movements in the sterling-yen exchange rate, it expected licensing revenue to be down by about £10m.
"The 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 chief executive Christopher Bailey.
"With great brand momentum and a focused vision, we remain confident of delivering sustainable, profitable growth into the future."'Creditable performance'
The company said it had seen double-digit sales growth in American and Asia Pacific markets. Europe, the Middle East and Africa saw "low single-digit" sales growth.
The retailer also highlighted the strong performance of its online business.
"There are a number of strong figures coming from the statement, from the overall hike in revenues through to robust growth in the Asia Pacific - China in particular - and a creditable digital performance in the Americas," said Richard Hunter at Hargreaves Lansdown Stockbrokers.
"Less positively, the previously flagged currency headwinds are likely to prove a material drag on full year profits."
Burberry holds its AGM on Friday, and the meeting is likely to be dominated by Mr Bailey's reported £20m pay package, which some shareholders consider to be more than generous.
Mr Bailey took over as chief executive of Burberry from Angela Ahrendts, who left the company to join Apple.