Burberry Group plc (LON:BRBY)’s half year revenues of £1.2bn represent 45% growth year-on-year, once currency movements are accounted for, and are broadly in line with what was achieved pre-pandemic. That reflects strong growth in the Americas, China and South Korea, with strong growth in Leather and outerwear.
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Underlying operating profits rose fourfold to £196m. That reflects higher gross margins as the group focused on reduced discounting and product elevation, driving higher prices.
The group announced a dividend of 11.6p, compared to no dividend a year ago. The group also announced a £150m share buyback.
The shares fell 7.0% in early trading.
Burberry's Sales Are Back To Pre-Pandemic Levels
Nicholas Hyett, Equity Analyst at Hargreaves Lansdown:
"We think the market’s reaction to Burberry results this morning is somewhat harsh.
True, with international long-haul tourists still few and far between Burberry’s European stores continue to struggle – dependent as they are on well-heeled travellers for a large slice of their sales. However, at least some of those sales seem to be shifting towards home markets – with strong growth in the Americas and China suggesting the Burberry brand continues to resonate well even if the sales channel is different. So much so that sales are back to pre-pandemic levels.
The revenue recovery has fed through to profits, helped by reduced discounting and price rises, and that in turn has led management to restart the dividend and announce a £150m share buyback. With operating profits on course to beat 2019 results for the year as a whole, the group seems to have put the pandemic behind it."
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