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Burberry’s FY22 revenue up; outlook depends on China’s COVID recovery

by admin
May 23, 2022
in Fashion
Burberry’s FY22 revenue up; outlook depends on China’s COVID recovery





Despite a continuing challenging external environment, British fashion house Burberry’s fiscal 2022 (FY22) revenue increased 10 per cent vs FY20 and 23 per cent vs FY21 at CER. Full-price comparable store sales rose 30 per cent vs LLY as its strategy to exit mainline and digital markdowns drove a material enhancement in the quality of the revenue streams.

Burberry’s outlook is dependent on the impact of COVID-19 and rate of recovery in consumer spending in Mainland China.

Despite a continuing challenging external environment, British fashion house Burberry’s fiscal 2022 (FY22) revenue increased 10 per cent vs FY20 and 23 per cent vs FY21 at CER. Full-price comparable store sales rose 30 per cent vs LLY as its strategy to exit mainline and digital markdowns drove a material enhancement in the quality of the revenue streams.

Regionally, Americas led full-price comparable store sales growth with sales almost doubling in the US compared with FY20. Full-price comparable store sales were also strong in South Korea where they increased 81 per cent and in Mainland China where they rose over 50 per cent compared with FY20, despite regional lockdowns impacting the performance, particularly in March, the company said in its preliminary results for 53 weeks ended April 2, 2022.

Burberry also saw improving trends in EMEIA despite an ongoing headwind from reduced tourists due to COVID-19 related travel restrictions.

The company improved profitability with the adjusted gross margin, up 60bps to 70.6 per cent at CER despite pressures from Brexit duties and supply chain inflation. Adjusted operating profit came in ahead of guidance, up 38 per cent at CER vs FY21 to £523 million at reported rates. FY22 also delivered a marked improvement in the operating leverage with adjusted operating margin increasing to 19 per cent at CER (18.5 per cent reported).

During the year, the company invested in its focus categories outerwear and leather goods. FY22 full-price outerwear sales grew 39 per cent vs LLY. Leather goods also delivered a strong performance, with FY22 full-price sales up 28 per cent vs LLY with the fourth quarter benefitting from the Frances tote, a recent extension to the TB family as part of its Summer 22 collection.

In total, the company now has 47 stores in its new design including the Paris flagship on Rue Saint Honoré. It has 65 stores planned for FY23, meaning that by the end of the fiscal year, around a quarter of its directly operated stores will carry the new design.

Burberry also announced that it is now carbon neutral across its own operations globally; all the electricity it uses is from renewable sources; and almost all its products have a positive attribute, meaning they carry a social or environmental benefit. The company aims to become Climate Positive by 2040, not only by becoming net zero 10-years ahead of the 1.5-degree pathway set out in the Paris Agreement but also by further reducing emissions across its extended supply chain.

The company maintains its guidance of high single-digit revenue growth and meaningful margin accretion at CER in the medium-term. While the current macro-economic environment creates some near-term uncertainty, Burberry is actively managing the headwind from inflation. Based on 6 May 2022 spot rates, it expects a currency tailwind of £159 million on revenue and £92 million on adjusted operating profit in FY23.

Fibre2Fashion News Desk (KD)





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