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Burberry Group Plc Continued to build brand heat around new creative vision

Burberry Group Plc (LON:BRBY), today announced 3Q trading update.

Marco Gobbetti, Burberry Chief Executive Officer commented:

“I am pleased with our progress in the quarter as we continued to build brand heat around our new creative vision and shift consumer perception of Burberry. Excitement is growing ahead of next month’s launch of Riccardo’s debut collection. We will continue to manage the business dynamically as we reposition the brand. We confirm our outlook for the full year.”

· Built brand heat through Festive campaign, Vivienne Westwood collaboration and B-Series product drops

· Continued to shift consumer perceptions of the brand, driving increases in digital engagement and endorsement from key influencers

· Wholesale clients responded positively to Riccardo’s commercial product lines as the transformation of our distribution network continues

· Preparations on track for launch of Riccardo’s debut runway collection arriving in stores from late February

· Continued to manage the business dynamically to deliver financial objectives and protect the brand

Retail revenue 13 weeks to 29 December

% change

£ million

2018

2017

Reported FX

CER*

Retail revenue

711

719

-1%

-2%

      Comparable store sales

1%

2%

*Growth at CER includes -1.1% impact from retail calendar and -0.4% impact from IFRS 15. For more detail see the Appendix

 

· Strong Festive campaign with social conversation reaching c57 million consumers

· Comparable store sales +1% with a consistent performance across regions:

· Asia Pacific benefited from Mainland China up mid-single digits

· EMEIA showed a small improvement in tourist spending quarter on quarter

· Americas was impacted by softer footfall trends

· Space -1% with two net closures in the quarter

Outlook

· Maintaining FY 2019 guidance at CER** including delivery of cumulative cost savings of £100m

**See Appendix

The financial information contained herein is unaudited.

Business review

While still in the first phase of our multi-year plan to transform and reposition Burberry, we made good progress in the quarter as we built brand heat and continued to shift consumer perceptions, while maintaining our focus on our financial and operational objectives.

We used the monthly B-Series to bring limited-edition products designed by Riccardo to consumers. Sold predominantly through social media, these collections resonated strongly with new and younger customers and were endorsed by key influencers around the world. In China, the B Series was recognised as 2018’s most exciting luxury campaign on WeChat.

Building on our new go-to-market model of frequent product drops, we launched an exciting collaboration with Vivienne Westwood in December. The limited-edition collection of Westwood’s iconic pieces reimagined in Burberry vintage check saw strong global demand and attracted exceptionally high traffic to our digital platform.

This year, our Festive campaign celebrated Christmas traditions and rituals. Centred around a film entitled ‘Close Your Eyes and Think of Christmas,’ it featured an all-star cast including Kristin Scott Thomas, MIA and Matt Smith. The response was strong with associated social conversation reaching around 57 million consumers. More widely, our social media presence continues to grow with more than one million additional followers QoQ across Instagram and WeChat and a more than 50% improvement in reach on WeChat.

We continued to translate our new creative vision into our distribution network. As guided, we are accelerating our wholesale remodelling in this half, stepping up our closure programme of non-luxury doors in the US. And in retail, our store refresh programme will reimagine 10 key flagships by the end of the financial year.

Wholesale clients responded positively to Riccardo’s commercial product lines and excitement is building ahead of his debut runway collection arriving in stores from late February. We have a strong plan for the launch including activations across key wholesale doors.

Building on our commitment to become carbon neutral in our own operations by 2022, in December we partnered with UN Climate Change to launch the Fashion Industry Charter for Climate Action. The charter aims to drive change across the industry with an initial goal of reducing the aggregate greenhouse gas emissions by 30% by 2030.

Financial performance

As previously highlighted, at this stage of the transition we are navigating our business between the new branding and vision for Burberry and the previous collection in store that does not yet reflect our new positioning. We continued to manage our business dynamically, delivering comparable store retail sales growth of +1% in the period.

FY 2019 Outlook

We maintain our FY guidance of broadly stable revenue and adjusted operating margin at CER and the delivery of £100m cumulative cost savings.