Burberry returns to growth as China sales improve

(Sharecast News) - Burberry has reported an increase in quarterly comparable store sales for the first time in two years, helped by a turnaround in China, with the British luxury brand swinging to an adjusted operating profit in the first half. The company reported an adjusted operating profit of £19m in the first half to 27 September, compared with a loss of £41m the year before, as the adjusted operating margin improved to 1.9% from -3.8% previously.

Group revenues over the half totalled £1.03bn, down 5% on the year before but flat on a comparable stores basis, as a 1% decline in the first quarter was offset by 2% growth in the second.

Notably, comparable store sales in Greater China - which account for a quarter of group sales - increased by 3% in the second quarter, following a 5% decline in the first quarter.

Chief executive Joshua Schulman expressed confidence that the company's Burberry Forward transformation programme, now one year in, "is the right strategic path to restore brand relevance and value creation".

"My belief in this extraordinary British luxury house is stronger than ever. With the consistency of our Timeless British Luxury brand expression and an improved product offer, we have begun to see customers return to the brand they love, resulting in comparable store sales growth for the first time in two years."

Looking ahead, Burberry said it expects to see the impact of its initiatives build as the year progresses, with "continued margin improvement with a focus on simplification, productivity and cash".