While not reporting a barn-burner of a second quarter, most experts believe that the most recent results logged by Burberry will at least do some work to quell investor worries. While same-store sales were down by 3 percent, they were less down than the 5 percent that had been forecasted. All in, revenue ticked up slightly, increasing by 4 percent to $562.5 million.
That was the good news. The not-so-good news? The retailer cautioned that wholesale revenue could fall by 10 percent in the coming quarter, especially in the United States.
The Brexit vote — and the resultant tumble the pound has taken — may, in some sense, be a boost for Burberry, as its goods have essentially become “cheaper” for those buying in dollars. Those benefits will be felt by the luxury retailer into next year, with forecasts of an adjusted retail and wholesale profit injection of £90 million, higher than its May estimate.
In the background of the latest earnings report is the recent news that current CEO Christopher Bailey will be stepping down to be replaced by Céline Chief Marco Gobbetti. The full changeover is expected next year and is a move shareholders had increasingly been demanding as share price fell under Bailey.
The change, however, has mostly been heralded as adding “credibility to a Burberry turnaround story.”
