The Week Ahead: Focus on fashion with figures due from Burberry and ASOS

Models on the catwalk at Burberrys show during this years London Fashion Week.
Photo: Isabel Inf

Models on the catwalk at Burberrys show during this years London Fashion Week. Photo: Isabel Infantes /PA Wire - Credit: PA

Retailers Burberry and ASOS will report from opposite ends of the fashion spectrum this week, but both are expected to benefit from the Brexit-hit pound.

Luxury fashion firm Burberry is set to reveal a return to like-for-like sales growth when it updates on trading after a tough first half.

The group is expected to have benefited from a better summer for luxury sales, with analysts expecting tomorrow’s update to show a turnaround since a painful first quarter, when like-for-like sales fell 3%.

Retail experts forecast a 1% rise in like-for-like sales in the second quarter to the end of September, although last month’s unexpected heatwave has caused chaos for UK clothing retailers.

It has been an eventful first half for Burberry which announced in July that current chief executive Christopher Bailey is to be sidelined and replaced by Marco Gobbetti, currently at French firm Celine. Mr Gobbetti joins next summer when Mr Bailey will move to the role of president, also retaining the title of chief creative officer.

The changeover comes as the group looks to address falling profits and slowing sales. In May, it anounced plans to slash £100m of costs to help offset difficult trading after reporting a 10% fall in full-year profits.

Analysts now believe Burberry is on the right track and it has been widely praised for its recent move to launch a “see now, buy now” fashion show.

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RBC Capital Markets said: “Burberry is at the forefront of the sector when adapting to changes in the millennial luxury consumer, who display greater appetite for newness and require faster response from luxury brands.”

The tumbling pound is also providing a welcome boost for Burberry, which makes most of its sales overseas. As of July, Burberry said it was in line for a £90m profit fillip from the pound, but the further falls in sterling since then could see the group revise this higher.

Online fashion firm ASOS is expected to report a jump in international sales on the back of the plunging pound when it reveals its annual results tomorrow.

The currency move is expected to help the firm outstrip previous expectations of 20% to 25% annual sales growth, with revenues likely to come in 25.5% higher, according to Shore Capital.

The broker’s analyst George Mensah said ASOS was buoyed by an 8% currency tailwind, helping it “finish the financial year with a flourish”, with 28.9% sales growth in the two months to August 31 2016.

With currency movements stripped out, ASOS – which stands for As Seen On Screen – posted sales growth of 28% in the UK for the four months to June 30 and 25% across its burgeoning international arm, which now accounts for more than half of group turnover.