Burberry share price: First-quarter sales drop 3%

Burberry (LON:BRBY) has updated investors on its first-quarter performance this morning. The statement follows the leadership changes at the luxury goods retailer unveiled earlier this week.

**Highlights from the company statement:**
Christopher Bailey, Chief Creative and Chief Executive Officer, commented:
“In what remained a challenging external environment, underlying retail sales were flat in the first quarter. In this context, we continue to focus on managing our business with agility whilst implementing the ambitious evolution of our strategies and ways of working we outlined in May, to position Burberry for long-term growth. These plans are now well underway and on track to deliver our financial goals.

This progress, together with our recent management appointments, gives us real confidence for the future.”
In the first quarter, retail comparable sales declined by 3%, with a similar performance in all three regions. The external environment remains challenging and underlying cost inflation pressures persist. Since May, our outlook for wholesale revenue, particularly in the US, is more cautious for both the first and second halves of the year, in fashion and Beauty.

Our initiatives, announced in May, to deliver enhanced revenue growth (through focusing on key products, retail productivity and e-commerce) and improved efficiency (through changing our ways of working) are well underway. As a result, we remain confident in delivering the financial goals outlined at the Preliminary Results.
Outlook
Retail: In FY 2017, net new space is still expected to contribute low single-digit percentage growth to total retail revenue. Around 15 mainline store openings are planned, with a similar number of closures.

Wholesale: We now expect total wholesale revenue at constant exchange rates in the six months to 30 September 2016 to be down by over 10% on the same period last year (H1 2015: £305m). This reflects significantly tighter inventory control by US wholesale customers, continued cautious ordering in other regions and the elevation of Beauty distribution in key markets.

FX impact on retail/wholesale adjusted profit: In FY 2017, if exchange rates* remain at current levels, we expect FY 2017 reported adjusted retail/wholesale profit to benefit by about £90m compared to FY 2016 rates. This compares to an expected benefit of about £50m at the time of the Preliminary Results based on 30 April 2016 effective rates.

Licensing: Total licensing revenue for FY 2017 is planned to be down by about £20m at constant exchange rates (FY 2016: £42m), primarily reflecting the expiry of the Japanese Burberry licences.

FY 2017 adjusted PBT: We continue to expect FY 2017 adjusted profit before tax to be more second-half weighted than in FY 2016.

Share buyback: Following the announcements about new leadership roles, we are now in a position to commence the previously announced share buyback programme of up to £150m starting in FY 2017.
As of 07:04 BST, Wednesday, 13 July, Burberry Group plc share price is 1,203.00p.