Burberry Group Plc shares fell 6% after a slow down in the Americas overshadowed a rebound in China as the country reopened after the pandemic.
(Bloomberg) — Burberry Group Plc shares fell 6% after a slow down in the Americas overshadowed a rebound in China as the country reopened after the pandemic.
Retail comparable store sales rose 7% in the year to April 1, which was ahead of expected growth of 5.6%. However, the British brand’s revenue in the Americas continued to deteriorate with comparable sales dropping 7% in the final quarter.
Jonathan Akeroyd took over the running of the trench-coat maker more than a year ago promising to revive excitement in the brand. He has since named a new designer, Daniel Lee, whose debut collection in February sought to reassert the “Britishness” of Burberry.
The label was previously led by an Italian duo whose plan was to elevate the prestigiousness of Burberry in the eyes of consumers. While Akeroyd has said he will continue on this path, he also wants to boost revenue by selling more accessories and bags in the long term.
Read more: Burberry Tries to Make Britain Cool Again With Tartan And Whisky
Revenue accelerated in the last quarter as growth rebounded in China to 13%, according to a statement Thursday. But trends in the Americas worsened which Burberry blamed on the fact Americans are now traveling abroad again reducing local spending. Customers in the region are also buying fewer entry-level products, the company said.
Burberry kept its guidance for its medium-term targets, however, adding it’s mindful of the macroeconomic and geopolitical environment.
Luca Solca, analyst at Sanford C. Bernstein said Burberry is one or two steps behind on everything, with a faster decline in the USA, he added and more muted profit.
More visibility is needed on the impact of Lee, according to Morgan Stanley analyst Edouard Aubin who said the slight beat on sales was expected.
Burberry’s performance follows a mixed picture for luxury rivals in the first quarter of this year. Christian Dior owner LVMH Moet Hennessy Louis Vuitton SE, Hermes International and Prada SpA powered ahead while Gucci parent company Kering SA struggled.
(Updates with shares and additional information throughout.)
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