3Q17 Trading Update

Burberry reported 3Q17 retail sales growth of 4% to £735 million in constant currency (22% growth in reported currency), above the consensus estimate of £721 million.  Comparable-store sales increased 3% year over year, beating analysts’ estimates of 1%. The strong sales performance in the retail business was driven by strength in the UK and a return to growth in the Asia Pacific region.

Geographic Segment Sales

Asia Pacific: 3Q17 sales in Asia Pacific returned to growth, increasing in the low single-digit percentages. Hong Kong improved to a low single-digit percentage comparable-sales decline, with positive conversion offsetting footfall decline. Mainland China experienced high single-digit percentage comparable-sales growth. Americas: Revenues were down in the low single-digit percentages at constant currencies in the Americas. In the US, domestic and tourist demand remained uneven. Europe: Revenues in 3Q17 in the UK increased by 40% year over year on a comparable basis, driven by strong tourist spend, due to the weakness of sterling. Continental Europe remained weak, although the France business saw a sequential quarterly improvement compared to 2Q17.

Outlook

The company maintained its outlook for FY17. FY17 revenue consensus estimates stand at £2,755.3 million, implying annual year-over-year growth of 9.6%. Consensus expects operating profit of £440.8 million, implying a year-over-year increase of 9.4%. The FY17 consensus EPS estimate is 76 pence, implying a year-over-year increase of 8.6%.