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Burberry beats forecasts with 12% rise in sales Burberry beats forecasts with 12% rise in sales
(about 4 hours later)
Burberry has posted strong sales figures ahead of Friday's annual meeting, at which the fashion house faces a protest vote from shareholders over the £20m-plus pay package awarded to new boss Christopher Bailey.Burberry has posted strong sales figures ahead of Friday's annual meeting, at which the fashion house faces a protest vote from shareholders over the £20m-plus pay package awarded to new boss Christopher Bailey.
The British luxury brand said comparable sales (excluding new space) grew 12% in the three months to 30 June, beating City estimates and sending the shares 5% higher, to £14.91 in early trading.The British luxury brand said comparable sales (excluding new space) grew 12% in the three months to 30 June, beating City estimates and sending the shares 5% higher, to £14.91 in early trading.
Sales were driven by double-digit growth in Asia Pacific and the Americas. Europe, Middle East, India and Africa posted low single-digit sales growth. Total retail revenues rose to £370m, up 9% at reported exchange rates. Sales were driven by double-digit growth in Asia-Pacific and the Americas. Europe, Middle East, India and Africa posted low single-digit sales growth. Total retail revenues rose to £370m, up 9% at reported exchange rates.
Despite the strong sales figures, Burberry warned it could take a hit from the strong pound. It warned that if exchange rates remain at current levels, the impact on its 2015 profits will be "material", the third such warning since April. It added: "As an indication, rebasing 2014 retail/wholesale profit for current effective exchange rates would now reduce reported profit by about £55m." That figure has increased from £30m in April and £40m in May.Despite the strong sales figures, Burberry warned it could take a hit from the strong pound. It warned that if exchange rates remain at current levels, the impact on its 2015 profits will be "material", the third such warning since April. It added: "As an indication, rebasing 2014 retail/wholesale profit for current effective exchange rates would now reduce reported profit by about £55m." That figure has increased from £30m in April and £40m in May.
The company is bracing itself for a showdown with shareholders at Friday's annual meeting. It has come under fire for handing Bailey £22.5m of "golden handcuffs" and other share awards in the last year, as well as a £440,000 cash allowance.The company is bracing itself for a showdown with shareholders at Friday's annual meeting. It has come under fire for handing Bailey £22.5m of "golden handcuffs" and other share awards in the last year, as well as a £440,000 cash allowance.
The Investment Management Association has given Burberry an "amber top" rating for its executive pay arrangements, calling on its members (who account for about 15% of the London stock market) to scrutinise them closely before casting their votes.The Investment Management Association has given Burberry an "amber top" rating for its executive pay arrangements, calling on its members (who account for about 15% of the London stock market) to scrutinise them closely before casting their votes.
Shareholder advisory group PIRC urged investors to vote against the remuneration policy. It said: "The executive directors' total potential rewards under all incentive schemes are considered to be excessive as they may amount to 825% of base salary."Shareholder advisory group PIRC urged investors to vote against the remuneration policy. It said: "The executive directors' total potential rewards under all incentive schemes are considered to be excessive as they may amount to 825% of base salary."
The 158-year-old company is scaling up its presence in Japan and is expanding its beauty business, with plans to enter the £26bn skincare market by late 2015. Bailey took over from Angela Ahrendts in May and remains the label's chief designer. Ahrendts turned Burberry, until then heavily reliant on raincoats and its trademark camel, red and black check, into a true luxury brand and invested heavily in its digital presence.The 158-year-old company is scaling up its presence in Japan and is expanding its beauty business, with plans to enter the £26bn skincare market by late 2015. Bailey took over from Angela Ahrendts in May and remains the label's chief designer. Ahrendts turned Burberry, until then heavily reliant on raincoats and its trademark camel, red and black check, into a true luxury brand and invested heavily in its digital presence.
Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: "Today's update is showing signs of blowing away some cobwebs from Burberry's recent chequered history.Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: "Today's update is showing signs of blowing away some cobwebs from Burberry's recent chequered history.
"Burberry's focus on the integration of its online and physical presence is beginning to reap rewards, with the fashionable trend remaining in the company's favour. Less positively, the previously flagged currency headwinds are likely to prove a material drag on full year profits [and] the sector remains notoriously competitive.""Burberry's focus on the integration of its online and physical presence is beginning to reap rewards, with the fashionable trend remaining in the company's favour. Less positively, the previously flagged currency headwinds are likely to prove a material drag on full year profits [and] the sector remains notoriously competitive."