Luxury Fashion Brand Transforms with New Vision and Strong Profit Growth
- Burberry’s profits rose by 36% in the first half of 2018.
- Sales decreased by 3% to £1.22bn compared to £1.26bn the previous year.
- Operating profit increased from £127m in 2017 to £173m in 2018.
- Free cash flow dropped to £46m, impacted by inventory outflow.
- Comparable store sales grew by 3%.
- Burberry maintains its FY 2019 guidance with £100m in cost savings.
- These results are the first since Riccardo Tisci became chief creative officer.
- CEO Marco Gobbetti praised the response to Tisci’s new vision.
- Burberry has committed to stop destroying unsaleable products and using fur.
Burberry has announced a remarkable 36% increase in profits for the 26-week period ending September 29, 2018, despite a slight dip in revenues. The luxury fashion retailer reported sales of £1.22 billion, down 3% from £1.26 billion the previous year. However, operating profit saw a significant rise, climbing from £127 million in 2017 to £173 million in 2018. The company also recorded a free cash flow of £46 million, a decrease from £171 million in the first half of 2018, largely due to an inventory outflow linked to ongoing product transitions and seasonal adjustments. On a positive note, comparable store sales increased by 3%. Burberry is sticking to its fiscal year 2019 guidance, which includes achieving cumulative cost savings of £100 million. These results mark the first since Riccardo Tisci took over as chief creative officer, and CEO Marco Gobbetti expressed enthusiasm about the early results of Tisci’s new creative direction. He noted that the initial feedback from influencers, press, buyers, and customers regarding Tisci’s debut collection, ‘Kingdom,’ has been exceptional. As Burberry embarks on a multi-year transformation plan, the company is dynamically managing the transition while confirming its outlook for the full year. Additionally, Burberry has recently announced it will cease the practice of destroying unsaleable products and using fur, effective immediately.
Factuality Level: 8
Factuality Justification: The article provides accurate information about Burberry’s financial performance, including profit increase, sales decline, free cash flow, comparable store sales growth, and the company’s outlook for the full year. It also mentions the change in creative direction with Riccardo Tisci replacing Christopher Bailey and the decision to stop destroying unsaleable products and using fur.
Noise Level: 3
Noise Justification: The article provides relevant information about Burberry’s financial performance and its transition under new creative direction. It includes specific numbers and a statement from the CEO, but lacks deeper analysis or contextualization of the results.
Financial Relevance: Yes
Financial Markets Impacted: Burberry’s stock price and luxury fashion retail sector
Financial Rating Justification: The article discusses Burberry’s financial performance, including profits, revenue, operating profit, and cost savings, which are relevant to the company’s financial situation. Additionally, it mentions the impact of changes in leadership and business strategies on the company’s operations, which can affect stock prices and the luxury fashion retail sector as a whole.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no extreme event mentioned in the article.
www.retailsector.co.uk