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Published: Sat, July 15, 2017
Tech | By Dwayne Harmon

Burberry reveals sales jump but pay row looms

Burberry reveals sales jump but pay row looms

Retail revenues were ahead of expectations up by 3% to £478m with strength returning to Asian markets as the United Kingdom leads the way in Europe.

The Americas delivered a low single-digit percentage decline amid negative footfall trends with tourist and domestic demand down, while the strength of the dollar drove a strong increase in sales from U.S. customers overseas. The company reported weakness in some areas of Continental Europe such as Italy. The strength of the USA dollar, however, drove a strong increase in sales from United States customers overseas.

Clayton thinks it was an overall "encouraging performance" from Burberry and believes the brand still has plenty of growth potential, as demonstrated with the success of its DK88 handbag. It said that if foreign exchange rates remain as they are now, reported adjusted pretax profit will face a GBP25.0 million hit, lower than its previous guidance of a GBP30.0 million hit.

The Investment Association and Institutional Shareholder Services have urged investors to vote against pay awards to new finance director Julie Brown, and Christopher Bailey, who was handed a £5.4 million share award in 2014 and this month relinquished the top role to Gobbetti. Management remain confident as they have maintained their guidance for full year profit before tax, provided there are no significant foreign exchange rate movements since 30 June.

The new chief executive, who has joined from French fashion house Celine, said that he was "in the process of discovery" about the company and would be focusing on improving Burberry's product and retail, particularly in Asia.

"Because it's such a major decision for Burberry with a great deal of investment involved, we chose to take our time", said finance director Julie Brown.

Commenting on the recent trading period, CEO Marco Gobbetti said: "I am delighted to have started as Burberry CEO".

In the midst of the shake-up, previous CEO Christopher Bailey became President and Chief Creative Officer of the brand last month.

Retail sales generated £478m in the three-month period, helped by strong performances in the United Kingdom and mainland China.

UBS warned that Burberry faces a number of risks in the luxury goods sector.

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