Burberry Cloak Saves Three Quarter Sales Growth

Burberry's classic cloak helped boost sales in the third quarter, far exceeding market expectations, despite the plight of the Hongkong's most profitable market.

In the 3 months ended December 31st, the retail sales of Burberry group rose 14% to 604 million pounds (about 954 million 300 thousand US dollars) in the third quarter.

The fixed exchange rate increased by 15%, while the same store sales generated 8% of revenue. New stores such as Beverly Hills and Tokyo accounted for a growth balance.

Its retail sales figure of 5% exceeded analysts' expectations, and it is widely expected that same store sales will be 2%.

On the London Stock Exchange, Burberry shares closed 1.4 down to 16.40 pounds (about 24.93 U.S. dollars).

Burberry CEO Christopher Bailey said its third quarter performance was "strong". The company plans to seize the opportunity to include the lunar new year in the fourth quarter, and said "the external environment is still challenging."

The big black spot in this quarter is Hongkong, which accounts for more than 10% of the group's profit margin.

Political protests last autumn have been driving customers away from sales in the region.

The result is that Asia's digit growth rate in three months is driven by China's mainland. This shows that this is still a strong market, and there are also South Korea. The sales in these two regions show a "middle to high single digit percentage" growth.

Exane BNP, managing director of Paris bank, Luca Solca, said that Burberry may be on the defensive in China's high-end market because of the upgrading of the retail network and the remaining influence of the more competitive price positioning of its peers.

In a conference call on Wednesday, Carol Fairweather, chief financial officer of Burberry, said that sales growth in Hongkong was negative this quarter, although the decline was partly offset by higher conversion rates.

The decline of peers seems to be the general trend.

By comparison, the Americas and the EMEIA region, namely Europe, the Middle East, India and Africa, all have two digit growth.

Burberr points out that changing the sales mix will put pressure on the profitability of the whole year, because Asia is a relatively high profit market in history.

Fairweather also pointed out that it is expected to reduce in the second half of the year.

The negative impact of fluctuations - less than 10 million pounds or 15 million 800 thousand dollars - offset Hongkong's slowing regional sales mix.

In terms of products, made in Scotland, the 2014 autumn winter cloak made of British wool and cashmere, with stripes and geometric patterns, harvested "an excellent success" in this quarter, and the perfume of My Burberry has been selling well both in physical stores and online.

It is understood that last year's newly released traditional windbreaker and cashmere

It's the best seller.

Beckham's youngest son, Romeo Beckham, appeared in the festival's advertising campaign, and his Burberry lattice fringed scarf also had a great impact.

In a report, Citigroup said, "there has been industry-leading growth in the difficult year of 2014," and Morgan Stanley Research said that Burberry is expected to "win a lot of business in the Christmas business."

Looking forward to the whole year, Burberry said that the new net profit margin is expected to contribute about 5% to total retail revenue growth.

In the six months to March 31st, wholesale income, excluding beauty, was set at a fixed rate of exchange as a percentage of a median digit, with a "more cautious attitude" from wholesale sales to European consumers and Asian tourist retail market.

According to the fixed exchange rate, the wholesaling department's wholesale revenue is expected to grow by about 25% throughout the year.