Luxury retailer Burberry reported a decline in revenue in the first half of its financial year as retail growth was offset by a decline in wholesale and licensing, but said plans to increase productivity and revenue remained on track.
In the six months to 30 September, the FTSE 100-listed firm posted a 4% year-on-year decline in total underlying revenue to £1.16bn ($1.42bn), although revenue increased 5% from the previous year on a reported currency basis.
The decline was driven by a 14% slump in underlying wholesale revenue, due in part to ongoing plans to boost the brand in the US. Meanwhile underlying licensing revenue tumbled 54% from the previous year, when they had fallen 51%, as Burberry licenses in Japan expired.
The retailer, which completed £34m of initial £100m share buyback programme in the period, said the sharp decline was expected and in line with forecast.
There was also some positive news for the British brand, as the company reported its plans to boost productivity and revenue were well underway. The firm added UK sales jumped 30% year-on-year, as by tourists from China and the US take advantage of the sharp depreciation of the pound that has followed Britain's vote to leave the European Union.
"With the cost of the flights justified by the saving on just a handful of Burberry's premium products, the group is already seeing a significant increase in luxury consumers taking advantage of the lower pound," said George Salmon, equity analyst at Hargreaves Lansdown.
"Unfortunately, the UK makes up a relatively small percentage of Burberry's sales. So while the group has managed to deliver improving like-for-like growth in its stores this quarter, this was achieved against a pretty unchallenging comparative period."
Meanwhile, the initial response to Burberry's new collection has been strong so far, the group said, while bags, dresses and ponchos continued to perform well in the period. The company, which is on track to deliver £20m worth of savings next year, added its digital segment was continuing to outperform the market and grew in all regions.
"In a challenging external environment, we continue to focus on product innovation [...] against a backdrop of sustained action and investment," said Christopher Bailey, the company's chief executive and chief creative officer.
"The progress we are making to improve our ways of working, the agility of our teams to react to changes in consumer behaviour and the strength of our brand give us confidence for the future. We remain on track to deliver our financial goals."