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Burberry lowers FY23 forecast despite record revenues

The UK remained challenged with London performance ‘weak’ given high tourist exposure

Burberry has lowered its FY23 forecast as it expects a currency tailwind of £159m on revenues and £92m on adjusted operating profit, despite hailing record revenues in FY22.

The group announced revenues surged 21% year-on-year from £2.34bn to £2.82bn for the 53 weeks ending 2 April 2022, against a backdrop of recovery from Covid-19

Pre-tax profits also grew 4% from £490m to £511m, and adjusted operating profit increased 4% to £543m compared to £521m last year.

Overall, comparable store sales grew 18% compared to FY21, driven by full-price sales. However, this is partially offset by the exit of markdowns in mainline and digital stores, which saw a 9% drop from pre-pandemic levels as Covid restrictions “severely” impacted Mainland China. 

Full-price comparable store sales are up 30% on a two-year basis, with the Americas leading sales growth which almost doubled compared to pre-Covid levels. 

Additionally, full-price comparable store sales surged 81% in South Korea, although EMEIA store sales fell by 18% year-on-year due to a “drag” from the lack of tourists.

Continental Europe saw a decline broadly in line with the regional average. However, total local European customer spend was up over 30% on a two-year basis, although the UK remained challenged with London performance “weak” given high tourist exposure.

Meanwhile, Burberry’s investment in outerwear sales are up 39% compared to pre-Covid levels and leather goods delivered growth of 28%.

Full-year dividend per share is now up 11% to 47.0p, and a £400m share buy back is set for completion in FY23.

Burberry also has 65 stores planned for FY23, with digital remaining a key focus area for the business.

The company said it has met its 2017-2022 responsibility targets and is now carbon neutral across its own operations globally. All the electricity used comes from renewable sources, and Burberry plans to become Climate Positive by 2040.

Burberry said: “Our outlook is dependent on the impact of Covid-19 and rate of recovery in consumer spending in Mainland China. While the current macroeconomic environment creates some near term uncertainty, we are actively managing the headwind from inflation.”

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