Burberry turnaround hopes boosted by US holiday | Stock News

By Helen Reid and Yadarisa Shabong

(Reuters) -Burberry reported a smaller than anticipated 4% drop in quarterly comparable store gross sales on Friday, helped by a stronger vacation season in america, an encouraging step within the British luxurious model’s turnaround efforts.

Burberry (LON:) shares jumped 12% as buyers welcomed the signal of bettering demand, including to hopes that luxurious customers’ confidence is returning. Shares in luxurious conglomerate Kering (EPA:) additionally gained 8%, whereas sector chief LVMH was up 3%.

Burberry CEO Joshua Schulman, who took over on the struggling model six months in the past, stated its festive promoting campaigns, which highlighted its trademark trench coats and scarves more than luggage and footwear, resonated with a broad vary of clients.

“We are extremely pleased with the results,” Schulman advised journalists on a call. “We have seen new customer growth in the month of December for the first time in over two years, and we’ve seen an increase in the brand desirability as well.”

Schulman’s strategy is to put the concentrate on Burberry’s best-known merchandise to win back clients he stated have been alienated by much less recognisable designs and better costs. The company stated cashmere scarves, priced between 420 and 990 kilos ($522-$1,230), in addition to outerwear, outperformed globally.

Analysts had anticipated a 12% decline in comparable gross sales for Burberry’s third quarter, which runs to Dec. 28.

“We view these results as a first (and early) step in the right direction,” RBC analysts stated in a observe.

Analysts at Citi stated the sturdy gross sales reported by Richemont (SIX:) and Brunello Cucinelli just lately may help make buyers really feel more optimistic that luxurious demand is bettering, serving to turnaround tales like Burberry.

SALES IMPROVE ACROSS REGIONS

Schulman stated New York, the place the model opened a refurbished store on 57th Road that includes “uber-luxe” coats, carried out nicely, serving to gross sales within the Americas grow 4% within the quarter.

Burberry has stretched costs of its costliest merchandise within the U.S., like a $13,900 girls’s trench coat with mohair wool trims, reflecting higher luxurious demand there, Luxurynsight information reveals.

Different areas additionally delivered an enchancment in gross sales from the earlier quarter. Asia Pacific gross sales have been down 9% after a 28% decline within the second quarter, whereas Europe, Center East, India and Africa (EMEIA) gross sales have been down 2%, in opposition to a 10% fall beforehand.

Burberry’s chief financial officer Kate Ferry stated markdowns launched in December had contributed to bettering gross sales and helped clear stock, however that full-price gross sales have been additionally encouraging.

Ferry stated there have been indicators of stabilisation in shopper demand in China, a key market for the model which opened a new store in Beijing in November. Mainland China accounted for about a fifth of Burberry’s complete income in its final financial yr.

The company stated it was now more seemingly that it will make a revenue over its financial yr, anticipating to offset the adjusted working loss of 41 million kilos ($51 million) it reported in its first half.

Third-quarter retail income was 659 million kilos ($818 million), down from 706 million kilos in the identical quarter a yr earlier.

With Burberry set to current its Autumn/Winter 2025 assortment at London Trend Week on Feb. 24, rumours proceed to swirl round how long inventive director Daniel Lee will stick with the model, with an Italian newspaper this week reporting he plans to affix Jil Sander.

Each Schulman and Ferry, requested by journalists and analysts whether or not Lee was leaving, stated they do not touch upon hypothesis.

($1 = 0.8074 kilos)