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Burberry and Mulberry report online growth

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Luxury brands Burberry and Mulberry today both reported online growth in the first half of their financial years. But Burberry said demand from Chinese shoppers had weakened in the second quarter, while Mulberry warned on profits as UK sales fell sharply.

Burberry today said “digital outperformed in all regions,” contributing to a first half in which total revenue reached £1.1bn.

The multichannel retailer and upmarket fashion brand said in a trading statement today that demand from Chinese customers, at home and when travelling, had softened in the second quarter of the year. Total first half revenues grew by 14% on an underlying basis, though currency fluctuations meant Burberry reported 7% sales growth. Retail revenues, which include online, grew by 15% underlying, or 8% after currency changes were taken into account, to £748m in the six months to the end of September. Like-for-like sales were up by 10% as the company opened nine stores, including six at airports, and closed eight. Meanwhile wholesale revenues were up by 13%, underlying, to £317m and income from licensing fell. The company said it expected to see a more cautious approach from wholesale customers selling both in Europe and in Asian travel markets.

Sales growth was strongest in Asia Pacific and the Americas, where underlying sales grew by 17%. However currency fluctuations meant the business reported bottom line growth of 9% in both regions, and growth of 6% in Europe, the Middle East, India and Africa. Burberry said it would invest in order to drive long-term profitable growth.

Christopher Bailey, chief creative and chief executive officer, said the first half had been a strong one. “Looking ahead,” he said, “while mindful of the more difficult external environment, we have never been better prepared internally for the all-important festive periods, with our teams intensely focused on delivering outstanding products and experiences, alongside continued investment to drive productivity and profitable growth over the long term.”

Meanwhile luxury leather accessories business Mulberry said online sales had grown by 1% to £6.6m over the same period, and now accounted for 10% of group sales, a proportion that has grown from 8% at the same time last year. But the company warned full-year pre-tax profits would fall short of expectations, with overall first half sales down by 17% at £64.7m and retail sales down by 9% at £45.1m. Full price UK sales fell by 12% or £2.7m to £20.9m thanks to a decline in footfall, particularly of tourist shoppers while outlet sales also fell, by 23%, or £3m, to £10.1m. But international sales grew by £1.2m, or 20%, to £7.5m. Wholesale was also hit by a greater than expected decline.

Executive chairman Godfrey Davis said: “As expected, the first half has been difficult, but the group remains profitable and cash generative, giving us the resources to invest for the future. Despite the current challenges, I remain confident that we will build on Mulberry’s solid foundations and unique brand positioning in the luxury market to restore growth in the medium term.”

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