Burberry profits and revenue fall as Bailey transitions, and New York and Company looks to steady the ship.
As Burberry Group gets ready to pass the CEO baton, the luxury goods company continued to face financial challenges.
Burberry Group profits declined 7.3% to 286.8 million pounds ($375.7 million) in the 12 months to March 31. Revenue for the year fell 10.4% on a reported basis to 2.8 billion pounds ($3.65 million.)
The company said it continued to take strategic actions to elevate its luxury retail and digital business in the 2017 fiscal year, particularly in wholesale and beauty, to strengthen the brand and reposition it for growth. This includes a strengthened leadership with experience from luxury and business transformation and key appointments in product, customer experience and technology.
“The actions we have taken to lay the foundations for future growth are yielding early benefits and I remain confident that these will build over time,” Christopher Bailey, chief creative and chief executive officer, said. “Marco Gobbetti assumes the role of CEO from July. With his extensive experience in the sector, we will build on these foundations to elevate and strengthen the brand further and take Burberry to the next level as a global luxury retail and digital business.”
Bailey will remain as chief creative officer and said he looks forward to working closely with him Gobbetti “in this next chapter.”
In the second quarter, retail accounted for 77 percent of revenue, up 3 percent, and wholesale made up 23 percent, with a 14 percent decline as the company transitioned away from that operation.
Adjusted profit before tax was up 42 million pounds ($54.7 million) to 462 million pounds ($601.4 million), in line with guidance.
New York and Co.
New York & Co. Inc., despite battling a difficult retail environment, showed sings of improvement in the first quarter.
“Our first quarter top and bottom-line results were in line with our guidance, and were highlighted by the continued success of our celebrity collaborations, a double-digit percentage increase in e-commerce sales and strong gross margin expansion to its highest level in the first quarter since 2008,” New York & Company’s CEO Gregory Scott, said. “As we expand on our high-growth celebrity collaborations, we are excited about our multi-year partnership with Gabrielle Union, who will be the face of our 7th Avenue Design Studio and will launch her own collection in the third quarter of this year.”
In the first quarter ended April 30, net sales declined 2.9% to $209.9 million from $216 million in the prior year, reflecting growth in e-commerce, offset by decreases in brick-and-mortar stores due to the combination of lower store count (463 this year versus 488 last year) and decreased comparable store sales.
Gross profit as a percentage of net sales increased 300 basis points to 30.7% versus the fiscal year 2016 first quarter gross profit percentage of 27.7%, reflecting the highest gross margin rate achieved in the first quarter since 2008. This increase during 2017 reflects benefits from our ongoing business re-engineering program called Project Excellence comprised of $5.7 million of benefits from our new private label credit card agreement and improved product markups.
Operating results narrowed to a loss of $3.9 million from a year-ago loss of $5.4 million.
Scott said while the specialty women’s apparel chain with 463 stores saw a soft start to the quarter due to reduced mall traffic, comparable store sales significantly improve for the combined March and April period.
“While the apparel retail sector remains challenging with traffic declines and a highly promotional environment, we remain committed to accelerating even greater success in the proven high-growth segments of celebrity partnerships, sub-brands and e-commerce,” he said. “We expect that the continued execution of our strategies will drive increased sales productivity and profitability in this fiscal year and enhance value for our shareholders.”