Burberry's 'very strong' manufacturing facilities in Yorkshire help drive growth over festive period

In a call with journalists, Julie Brown, Burberry’s chief operating and financial officer, said the company retained “very strong” manufacturing facilities in Yorkshire. She said Burberry had seen a good recovery overall in Europe over the third quarter of its financial year.

In a trading update Burberry said that third quarter comparable store sales increased by 1 per cent, after being impacted by COVID-19-related disruption in mainland China. Excluding mainland China, comparable store sales grew 11 per cent, Burberry said.

Jonathan Akeroyd, Burberry’s chief executive, said: “Overall, we are pleased with our performance in the third quarter as double-digit revenue growth outside of mainland China offset the impact of COVID-19-related disruption there.

"Europe in particular continued to perform well, driven by strong trading over the festive period, and leather goods delivered another quarter of double-digit growth globally. We remain confident in our ability to reach our medium-term targets, despite the current macro-economic environment.

"We are focused on executing our plan to realise Burberry’s potential as the modern British luxury brand and we look forward to unveiling Daniel Lee’s debut collection for Burberry on our return to London Fashion Week next month.”

Commenting on outlook, Burberry said: "Our near and medium-term targets remain unchanged as we continue to target high-single digit revenue growth with operating leverage ensuring good margin progression, notwithstanding the current macro environment.”

Richard Hunter, head of markets at interactive investor, commented “Despite an awkward economic backdrop, Burberry has ploughed on with the innovative campaigns which are making the brand increasingly relevant to a new generation of customers.

“In some ways, the higher end nature of the group’s products are aimed at customers who, to a large extent, are largely shielded from inflationary or even recessionary concerns.

"In addition, the strength of the US dollar has not only attracted more tourist spending in Europe from Americans, but has the added advantage of boosting earnings which become more valuable when repatriated.

He added: “The relaxation of the zero tolerance Covid-19 policy in China has yet to wash through to the numbers, and this could be an area in which Burberry gains significant advantage.

"Traditionally the group has reaped the benefit of Asian tourism spending, and the possibility of pent-up demand from locked-down consumers could well lead to a coiled spring effect which would complement the progress being made elsewhere.”

Charlie Huggins, Head of Equities at Wealth Club, commented: “Covid-19 related disruptions have impacted Burberry's performance in China this quarter..But elsewhere, performance is more encouraging. As pandemic restrictions in China ease, sales should improve.”