BBRYF

Burberry Group Plc

20.55
USD
0.64%
20.55
USD
0.64%
20.42 30.00
52 weeks
52 weeks

Mkt Cap 8.32B

Shares Out 404.87M

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Burberry beats earnings estimates, China lockdowns loom over forecasts

Burberry Group (OTCPK:BURBY) posted a sweet-smelling earnings result on Wednesday, but challenges in China still loom large. Shares of the luxury fashion retailer gained in London after reporting a jump in revenue to £2.8 billion for the April-ended fiscal year, up from £2.3bn in the prior year. Operating profits also pushed higher, growing to £543 million from £521 million in 2021. Especially important, the brand’s status as a purveyor of Veblen goods allowed it to widen operating margin to 18.5% from 16.9% in 2021 by raising prices and increasing demand. Due to strong demand, the group reaffirmed its full-year guidance for the new fiscal year and announced its plan to open more locations after establishing 38 new stores in the past year. 47 stores are now set for redesign as well, including flagship locations like its location in Paris Rue Saint Honore. To be sure, the company was quite cautious in its outlook as it regarded China. Lockdowns have understandably hampered results for all retailers, but the lack of tourism into China and among Chinese nationals was noted as a significant headwind for luxury retailers like Burberry (OTCPK:BURBY) in particular. "Our outlook is dependent on the impact of COVID-19 and rate of recovery in consumer spending in Mainland China," the company said. "While the current macroeconomic environment creates some near term uncertainty, we are actively managing the headwind from inflation." While inflation is less likely to hit affluent customers, the lockdowns and their anticipated conclusion come the summer will be pivotal to reaching its affirmed forecast. As deadlines for reopening are continually extended, this prospect remains tenuous. Shares traded in a volatile manner amid the uncertainty, retreating from early gains in London to nearly flat in afternoon trading in Great Britain.

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