The Week Ahead: Weaker pound to deliver further boost to sales at Burberry

The Burberry store in Knightsbridge, London.
Picture: Jonathan Brady/PA Wire

The Burberry store in Knightsbridge, London. Picture: Jonathan Brady/PA Wire - Credit: PA

Burberry is expected to report a lift in fourth-quarter sales tomorrow as the Brexit-hit pound continues to boost the fashion house despite a slowdown in UK consumer spending.

Models on the catwalk during the Burberry Autumn/Winter 2017 London Fashion Week show at Makers Hous

Models on the catwalk during the Burberry Autumn/Winter 2017 London Fashion Week show at Makers House , London, in February. Picture: Victoria Jones/PA Wire - Credit: PA

The group is forecast to notch up comparable sales growth of between 3% and 4%, driven by robust demand for luxury products in the UK and China.

Shoppers from the United States and Asia have been flocking to Britain to take advantage of the plunging pound by snapping up luxury goods at a knock-down price.

The pound’s near-20% fall in value against the US dollar since the Brexit vote has made British products cheaper for foreign buyers.

The three-month update comes alongside half-year results, forecast to show a total revenue rise of 14% to £1.6bn, according to analysts at Bernstein. It said total retail revenues looked set to jump by 19% to £1.3bn over the period.

Models on the catwalk during the Burberry Autumn/Winter 2017 London Fashion Week show at Makers Hous

Models on the catwalk during the Burberry Autumn/Winter 2017 London Fashion Week show at Makers House , London, in February. Picture: Victoria Jones/PA Wire - Credit: PA


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Bernstien’s Mario Ortelli said: “In the second half of 2017, we expect the continuing trends from the last period with good sales in mainland China and UK in part offset by a still weak Hong Kong.”

The firm, famous for its trench coats and check scarves, has set its sights on improving beauty sales after signing a deal with make-up and fragrance giant Coty at the beginning of the month.

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The licensing agreement will start in October and will see Burberry taking the creative lead and the US beauty giant using its global distribution network.

Burberry has already launched luxury fragrances Mr Burberry and My Burberry and revamped its make-up range over the past four years.

The firm said in January that its UK performance had contributed to a 3% rise in overall comparable sales across the group in the three months to December 31, with an improvement in some under-pressure markets including Hong Kong and France.

The third-quarter sales rise marked a welcome recovery under a turnaround plan that has included simplifying the product line, revamping its digital store and cutting costs.

Christopher Bailey is stepping down from the role of chief executive to become president and chief creative officer as part of the overhaul.

Marco Gobbetti has initially joined the company as an executive and will become chief executive in July.

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