- Q2 comparable sales rise 11%, a jump on 1% in Q1
- H1 revenue rises 5%, operating profit rises 6%
- New CEO plans to double sales of leather goods
- Shares flat
LONDON, Nov 17 (Reuters) - British luxury brand Burberry said quarterly comparable store sales rose 11%, a jump on its prior quarter and beating market forecasts, boosted by increased tourist spending in Europe and the easing of COVID restrictions in China.
The second-quarter performance lifted first-half revenue to 1.35 billion pounds ($1.61 billion), up 5% in constant exchange rates and just ahead of forecasts, while adjusted operating profit rose 6% to 238 million pounds.
Chief Executive Jonathan Akeroyd presented his plan to drive growth alongside the results, including a target to broadly double sales of leather goods, which currently account for 36% of Burberry's total, shoes and women's ready to wear, and grow outerwear by around 50% in the medium term.
Under the creative direction of its new designer Daniel Lee, Burberry would "refocus on Britishness", it said.
"Our focus in this next phase is on growth and acceleration," Akeroyd said, adding that the brand's long-term ambition was to achieve sales of 5 billion pounds.
Known for its camel, red and black check and trenchcoats, Burberry kept near-term guidance to the end of its 2024 financial year of high-single digit revenue growth and a margin of around 20%.
Finance director Julie Brown said the company aimed to increase sales to 4 billion pounds in the medium term, - three to five years - while broadly retaining its margin target.
She said comparable store sales in mainland China, Burberry's biggest single market, fell 1% in the second quarter after falling 35% in the first, despite some local COVID lockdowns in September.
"In the first quarter we had some of the major cities locked down - Shanghai and Beijing - which impacted trading," she told reporters. "In the second quarter the situation eased considerably."
Europe perform strongly, with sales up 25% in the second quarter, boosted by a rise in tourists from the United States, the Middle East and locations in Asia outside mainland China.
Overseas visitors in destinations like Paris, London and Milan accounted for 40% of business. Prior to the pandemic that figure stood around 60%.
"The big tourists going into EMEIA are essentially Americans and also the Middle Eastern nationalities."
The Chinese tourist was still absent, however, with around 97% of spending by Chinese customers happening in China.
The Americas continued to be a weak spot, with quarterly sales down 3% due to weaker demand for entry level items as well as U.S. customers spending in Europe rather than at home.
($1 = 0.8404 pounds)
Reporting by Paul Sandle and Sarah Young; Editing by Kate Holton and Emelia Sithole-Matarise
Source: Reuters