US Edition Christopher Bailey oversaw a bigger than expected rise in Burberry sales during his first quarter in charge of the British luxury brand.
Comparable sales – effectively like-for-like sales – rose by 12pc in the last three months, ahead of City expectations that sales would rise 8pc, the company disclosed in a trading update.
The performance was driven by a double-digit increase in China and Hong Kong, where Burberry has escaped the worst effects of a slowdown in the luxury market as authorities crack down on corruption and gift-giving.
Shares in Burberry rose by 28.19, or 2pc, to £14.47 following the trading update for the three months to June 30.
Mr Bailey, who is also Burberry’s chief creative officer, took over as chief executive from Angela Ahrendts at the start of May.
At the company’s annual meeting in London on Friday, Burberry is facing a rebellion from shareholders over the package Mr Bailey received upon becoming chief executive. Investors are unhappy a £440,000 “annual allowance” on top of his £1.1m basic salary.
But they are particularly concerned about the one-off award of 500,000 shares, worth more than £7m at Burberry’s current share price.
“This first quarter performance reflects our focus on striving to give customers the best possible experience of the Burberry brand through ongoing investment in retail, digital and service, both on and offline,” said Mr Bailey in the trading statement.
“The 12pc increase in comparable sales demonstrates our teams’ success in unlocking the benefits of these investments, as we continue to concentrate on the things we can control in an uncertain external environment.”
The “uncertain external environment” referred to by Mr Bailey, includes the strength of sterling.
Burberry said that at existing exchange rates there will be a “material” impact on profits from the strong pound. The pound is trading above $1.71, a six-year high. The company warned retail and wholesale profits would be reduced by £55m.
City analyst warned that while Burberry is leading the way in the luxury industry in terms of sales growth, its margins are being squeezed.
“Despite driving best-in-class top-line growth, the continued margin pressure at Burberry remains a concern, and the results do not help to improve the profitability gap that exists between Burberry and its luxury peers,” analysts at Bernstein said.
However, Julian Easthope at Barclays praised the company’s ability to convert visitors to Burberry stores and its website into sales.
“It reflects the investment made offline and online, in digital marketing and customer service,” Mr Easthope said. “There was a strong acceleration in click & collect, and ipad sales now available in 131 mainline stores. Conversion increased both in stores and online.”
Burberry said it enjoyed strong demand for male tailoring, as well as coats and leather goods.