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MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Burberry Group    BRBY   GB0031743007

BURBERRY GROUP

(BRBY)
  Report  
Delayed Quote. Delayed London Stock Exchange - 05/24 11:35:03 am
1808.5 GBp   +1.26%
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Burberry : profits lack new designer's touch

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05/16/2019 | 11:51am EDT
The logo of Burberry outlet store is seen in Paris

LONDON (Reuters) - Investors in Burberry have yet to see if new designer Riccardo Tisci's ranges are a hit with customers and will boost profits after the luxury brand said on Thursday its full-year results missed expectations.

Chief Executive Marco Gobbetti said Tisci's first two collections and limited edition drops of products on social media had built "brand heat" for the 163-year-old British label.

But the relatively small amount of product in store at the end of the financial year was not enough to ignite sales, which were flat in the 12 months to March 30.

Adjusted operating profit fell 6% to 438 million pounds, hit by foreign exchange movements and investment in new products. Analysts had expected 442 million pounds.

"We need to get the products in the stores to start to see the reaction of customers," Gobbetti told reporters.

"This year, starting in September, we are going to have a bigger part of our new product (in store) and we will be able to measure the reaction much better."

He noted some "incredible performances" in the luxury market, where fashion houses Gucci and Saint Laurent have been turned around in recent years - but he said not every brand could follow that.

Burberry's shares fell to a three-month low after the results, and were trading down 5% in afternoon trade, the biggest drop on the FTSE 100 index.

Credit Suisse analysts said fourth quarter like-for-like sales growth of 1% was below the consensus forecast of 2%, but welcomed the fact that sales and profit guidance for the current financial year was unchanged.

"The soft performance in 4Q should not be representative of the performance of the new creative direction taken by Riccardo Tisci as it accounted for only 10-15% of the total assortment in March," they said.

Burberry's Chief Financial Officer Julie Brown said Tisci's runway collection and summer range achieved strong double-digit growth in the last weeks of the financial year.

The fashion house has also introduced a new "TB" monogram based on the initials of founder Thomas Burberry.

Gobbetti is repositioning Burberry firmly in the luxury segment, raising the quality and prices for key items in categories such as leather goods.

To that end, it is rationalising its U.S. distribution to ensure the brand is in the right stores.

But it expects growth to be re-established in the second half as Tisci's collections build through the year.

It also said on Thursday it was investing in its flagship stores, with 80 expected to be redesigned by the end of the current financial year, while it was closing 38 smaller stores in secondary locations.

Burberry reported full-year revenue of 2.72 billion pounds, down 1% at constant exchange rates, while adjusted operating profit was flat on the same basis.

It said its revenue and adjusted operating margin would be broadly stable at constant exchange rates this financial year, and there would be a more pronounced weighting of operating profit to the second half versus the first.

The company increased its full-year dividend by 3% to 42.5 pence a share and announced a 150 million pound share buyback.

(Editing by Mark Potter and Elaine Hardcastle)

By Paul Sandle

Stocks mentioned in the article
ChangeLast1st jan.
BURBERRY GROUP 1.26% 1808.5 Delayed Quote.4.21%
FTSE 100 INDEX 0.28% 7234.11 End-of-day quote.0.00%
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Financials (GBP)
Sales 2020 2 782 M
EBIT 2020 448 M
Net income 2020 340 M
Finance 2020 850 M
Yield 2020 2,47%
P/E ratio 2020 21,86
P/E ratio 2021 19,42
EV / Sales 2020 2,37x
EV / Sales 2021 2,23x
Capitalization 7 441 M
Chart BURBERRY GROUP
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Technical analysis trends BURBERRY GROUP
Short TermMid-TermLong Term
TrendsBearishNeutralNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 20
Average target price 18,7  GBP
Spread / Average Target 3,3%
EPS Revisions
Managers
NameTitle
Marco Gobbetti Chief Executive Officer & Director
Gerard Martin Murphy Chairman
Julie Brown Director, Chief Operating & Financial Officer
Fumbi Chima Chief Information Officer
Mark McClennon Global Chief Information Officer
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