LONDON BRIEFING: Burberry makes strong start to year as seeks new CEO

(Alliance News) - Burberry on Friday reported a strong start to its financial year, with sales ...

Alliance News 16 July, 2021 | 8:15AM
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(Alliance News) - Burberry on Friday reported a strong start to its financial year, with sales now slightly ahead of pre-Covid levels in a sign that luxury retail has re-emerged from the pandemic.

In the 13 weeks to June 26, Burberry's retail revenue jumped 86% year-on-year to GBP479 million from GBP257 million. At constant currency, the leap was 98%.

Comparable store sales were 90% higher than they were a year earlier, and up 1% from two years prior, before the onset of the pandemic. Burberry's first quarter lapped an easier annual comparative, a time when the virus had begun to take a firm grip on the luxury retail market.

Full-price sales also surged in the recent quarter, meaning Burberry has not needed to increase promotional activity to flog stock. Full-price comparable store sales more than doubled yearly and rose 26% from pre-virus levels. Compared to the same period two years earlier, digital full price sales more than doubled, the company noted.

"We have made an excellent start to the new fiscal year. Full-price sales accelerated as our collections and campaigns attracted new, younger luxury customers to the brand. We saw strong growth across our strategic categories, in particular leather goods and outerwear, and exited markdowns in digital and mainline stores. We continued to roll out our new store concept that will transform how customers experience our brand and product in a uniquely British luxury setting," outgoing Chief Executive Officer Marco Gobbetti said.

Gobbetti will step down from the company at the end of 2021, joining Italian fashion firm Salvatore Ferragamo.

Burberry shares were 1.0% lower at 2,050.00 pence early Friday in London.

Here is what you need to know at the London market open:




FTSE 100: up 0.4% at 7,040.42


Hang Seng: up 0.3% at 28,070.76

Nikkei 225: closed down 1.0% at 28,003.08

DJIA: closed up 53.79 points, or 0.2%, at 34,987.02

S&P 500: closed down 14.27 points, or 0.3%, at 4,360.03

Nasdaq Composite: closed down 101.82 points, or 0.7%, at 14,543.13


EUR: flat at USD1.1809 (USD1.1814)

GBP: down at USD1.3811 (USD1.3855)

USD: soft at JPY109.96 (JPY110.00)

GOLD: up at USD1,825.51 per ounce (USD1,824.33)

OIL (Brent): down at USD73.16 a barrel (USD74.22)

(changes since previous London equities close)




Friday's Key Economic Events still to come

1100 CEST EU foreign trade

1100 CEST EU harmonised consumer price index

0930 BST UK monthly card spending statistics

0830 EDT US advance monthly sales for retail & food services

1000 EDT US manufacturing & trade

1000 EDT US University of Michigan index of consumer sentiment


The UK government's top medic has warned the number of people in hospital with coronavirus could reach "quite scary" levels within weeks. Chris Whitty said the UK is "not out of the woods yet", just hours after Prime Minister Boris Johnson declared it was "highly probable" the worst of the pandemic is over. The latest figures showed 48,553 more cases, the highest since January 15, while the 63 deaths were the biggest daily reported increase since March 26. Whitty, England's chief medical officer, said: "I don't think we should underestimate the fact that we could get into trouble again surprisingly fast." He warned that the number of people in hospital with Covid-19 is currently doubling about every three weeks and could reach "quite scary numbers" if the trend continues.


Prime Minister Justin Trudeau said Canada could start allowing fully vaccinated Americans into the country as of mid-August for non-essential travel and should be in a position to welcome fully vaccinated travellers from all countries by early September. Trudeau spoke with leaders of Canada's provinces on Thursday and his office released a readout of the call. He noted that if Canada's current positive path of vaccination rate and public health conditions continued, the border could reopen.












Rio Tinto said it expects iron ore shipments to be at the low end of the 2021 guidance range due to Covid-19 disruptions, tie-in and ramp up of brownfield replacement mines, and management of cultural heritage. The miner said Pilbara operations produced 152.3 million tonnes - with a Rio Tinto share of 126.9 million tonnes - in the first half of 2021, 5% lower than the first half of 2020 due to above-average rainfall, shutdowns to enable replacement mines to be tied in, processing plant availability, and cultural heritage management. Last year, Rio Tinto destroyed a 46,000-year-old Aboriginal heritage site - the Juukan Gorge caves - to expand the Pilbara iron ore mine in Western Australia, attracting public outcry, regulatory scrutiny, and changes at the top of the company. Mined copper and bauxite production, meanwhile, is expected to be at the low end of the guidance range in 2021 after mined copper from Kennecott and Escondida declined by 6% and 17%, respectively, in the first half of 2021. Bauxite production slipped to 27.3 tonnes from 28.4 tonnes year-on-year in the first six months of 2021.


Sales, marketing and support services firm DCC said it traded "very well" in the seasonally less significant first quarter of its current financial year, building on the strong performance recorded for the year that ended March 31. Operating profit growth was well ahead of the prior year and modestly ahead of expectations, driven by "very strong" organic profit growth in DCC Healthcare and DCC Technology. John Moloney will retire as chair and from the board following Friday's annual general meeting. Mark Breuer will succeed Moloney.


Burberry said it has made an "excellent start" to its current financial year, with comparable store sales rebounding strongly, rising 90% in the 13 weeks to June 26 from the prior year and were up 1% on two years ago, meaning pre-pandemic. Full-price sales growth accelerated to 26% on two years ago, driven by new, younger clientele, Burberry said. The luxury fashion house kept its first-half guidance unchanged except for Wholesale, which is now expected to increase by 60% year-on-year due to a stronger order book. Since the end of the first quarter, Burberry said it opened its first flagship carrying its new global design concept on Sloane Street in London.


Drugmaker AstraZeneca said US regulator decided that benefit-risk profile of roxadustat does not support approval for the treatment of anaemia in chronic kidney disease in non-dialysis dependent adult patients. The US Food & Drug Administration's Cardiovascular & Renal Drugs Advisory Committee also said that the benefit-risk profile of roxadustat does not support approval for the treatment of anaemia in chronic kidney disease in dialysis-dependent adult patients. "Although we are disappointed by today's outcome, we will continue to work closely with our partner FibroGen and the US FDA to determine the path forward for roxadustat," said Mene Pangalos, executive vice president at Astra's BioPharmaceuticals R&D.


DS Smith has agreed to sell its De Hoop paper mill in the Netherlands to De Jong Packaging for EUR50 million in cash. The mill produces 370,000 tonnes of mainly heavier grades of recycled paper per annum. The packaging company said the proceeds will be used to partly offset this year's enhanced investment in packaging capacity, with new greenfield corrugated box plants in Italy and Poland, and an expansion of its Arnstadt packaging facility in Germany.




Ascential - an e-commerce optimisation company - acquired a 51% majority stake in ASR Group, a digital content optimisation business that enables brands to grow sales through e-commerce marketplaces. The acquisition is for an initial cash payment of USD122 million. Ascential said it also has an option to acquire two further 24.5% stakes in ASR Group to own it wholly.


Asset manager Ninety One said assets under management at June 30 were GBP139.0 billion, up from GBP118.0 billion a year before and GBP130.9 billion on March 31.


Home repairs business HomeServe said the outlook for the full year remains in line with the guidance as it continues to see strong growth in its North American Membership & HVAC business and the Home Experts unit is on track to reach profitability. In UK Membership & HVAC, a transformation programme is under way, HomeServe noted, to create "a more diversified, efficient digital business", and return to stable growth. The company's Continental European Membership & HVAC businesses, and its joint venture in Japan, continue to make good progress.




Goldman Sachs will require staff at its London head office to wear face masks from Monday despite the easing of pandemic restrictions. While people will no longer be required by law to wear masks from Monday, the UK government has said people will still be expected to wear them in certain situations and some businesses, travel operators and local politicians have said that masks will still be necessary to use services. A Goldman Sachs spokesman told PA the US investment bank would require staff to wear masks in the London office "when not at their desk". He also confirmed the bank would not require staff to be vaccinated against Covid-19 before coming into the office.


Friday's Shareholder Meetings

Bermele PLC - GM re East Imperial acquisition

Cambria Automobiles PLC - GM re takeover


HomeServe PLC - AGM

Ormonde Mining PLC - AGM


By Tom Waite;

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Hammerson PLC 34.35 GBX -0.64 -
Burberry Group PLC 1,789.00 GBX -2.27
Quilter PLC Ordinary Shares 142.45 GBX -0.21 -
Tullow Oil PLC 52.34 GBX 2.18 -
Goldman Sachs Group Inc 399.81 USD 2.29

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