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Burberry warns against no-deal Brexit amid slowing sales growth

The British luxury fashion brand has warned that a no-deal scenario will dramatically increase the cost of doing business after announcing slower sales growth in its third quarter.

Burberry bag Source: Bloomberg

Burberry has warned against Britain bailing out of the EU without a deal, as it would add millions in additional trading costs for the fashion brand.

The company’s views on a no-deal Brexit come after the fashion brand missed analysts’ forecasts for third quarter sales growth, with Burberry reporting a 1% increase in revenues in the three months to December.

‘I am pleased with our progress in the quarter as we continued to build brand heat around our new creative vision and shift consumer perception of Burberry,’ CEO Marco Gobbetti said. ‘Excitement is growing ahead of next month’s launch of Riccardo’s debut collection.’

‘We will continue to manage the business dynamically as we reposition the brand,’ he added.

Burberry share price edges higher

Despite missing analysts’ forecasts, the UK fashion brand saw its share price edge higher, climbing more than 1% on Wednesday, hitting £18.02 as of 2:50pm GMT.

Burberry is in the early stages of a multi-year plan to transform and reposition the brand, with the aim of shifting consumer perceptions of the brand.

‘In fashion, appearances matter, and Burberry's 163-year-old brand is its most valuable asset,’ Equity analyst at Hargreaves Lansdowne George Salmon said. ‘In the UK the group is only just shaking the 'football hooligan' image it acquired in the early noughties.’

‘Gobbetti's fellow Italian, Riccardo Tisci, has come in as new Chief Creative Officer,’ he added. ‘He's got a good reputation in the industry, having breathed new life into the Givenchy brand, and his first collection has been well received.’

Burberry full year guidance unchanged

The British fashion brand has not amended its full year guidance in its recent trading update, with the business forecasting stable revenues and the delivery of £100 million in cumulative cost savings.

Burberry was able to offset weaker sales growth in the US by a strong social media marketing campaign in China that helped boost demand for its products in world’s second largest economy, with the company quick to brush off fears about a Chinese slowdown.

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