Burberry bullish on earnings as outerwear and leather goods sales soar

LONDON, Jan 19 (Reuters) – British luxury brand Burberry (BRBY.L) is expecting to beat profit forecasts after full-price sales accelerated in the third quarter, driven by a strong performance in clothing and leather goods and a significant improvement in Asia and Europe.

Known for its camel, red and black checks and TB monogram, Burberry halted markdowns in its main stores and online because they hurt its status as a high-end luxury brand.

Shares of the group, which have risen 1% in the past 12 months, significantly underperforming their peers, jumped 6.5% to 1,871p on Wednesday after Burberry’s bullish outlook.

Julie Brown, its chief financial officer, said full-price sales were up 26% from pre-pandemic levels, with all product categories growing in double digits, helped by flagship stores which were attracting new generation of Burberry customers.

“The brand is stronger, the product is stronger,” she told reporters. “The key product categories of leather goods and outerwear are performing very well.”

The Americas continued to stand out, she said, with more young men coming to buy Burberry products like sneakers.

Burberry said adjusted operating profit for the year to April 3 would rise by around 35% at constant exchange rates, well ahead of the consensus of 472 million pounds.

Brown said she expected the forecast to be much closer to the top of the range – which stands at 497 million pounds – plus a currency upside of around 13 million pounds (18 million of dollars).

Marco Gobbetti, the mastermind of Burberry’s multi-year repositioning plan, jumped ship for Ferragamo earlier this year. His replacement, Jonathan Akeroyd, joins him in April.

The strategy was disrupted by COVID-19, which first hit Burberry in its important Chinese market, before moving to the Americas and Europe, where the Asian tourist market disappeared and still has not returned. .

Burberry, unlike most other luxury groups, did not surpass pre-pandemic sales levels, with same-store sales down 3% from two years ago, due to the release of the markdown. Read more

Brown said the revenue headwind from that almost played out, with a “very minor” impact expected in the final quarter.

($1 = 0.7341 pounds)

Editing by James Davey, Kate Holton and Alexander Smith

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