Burberry reports a 2 percent drop in revenue for the three months to end-December 2017

British luxury brand Burberry reported a 2 percent drop in retail revenue for the Christmas quarter after sales in Europe slipped against a year ago when a fall in the pound had helped its home market.

Chief Executive Marco Gobbetti set out a plan in November to take the label further up-market, but the company said there would be little, if any, growth in revenue and operating profit until its 2021 financial year as the programme was implemented.

Shares in Burberry, up 9 percent over the last year, were down 4.7 percent at 0815 GMT after the trading update.

“Following better than expected sales for the December quarter from Richemont and Hugo Boss, Burberry’s retail performance in Q3 may be seen as a bit disappointing,” said RBC Europe analyst Rogerio Fujimori, who has an “underperform” rating on the stock.

Burberry said its retail revenue was 719 million pounds in the three months to Dec. 31, its fiscal third quarter, down from 735 million pounds in the same period in 2016.

The firm said retail revenue was up 1 percent on an underlying basis, while comparable store sales rose 2 percent – below analysts’ expectations.

Comparable store sales grew by a mid-single figure percentage in Asia Pacific and mainland China, and by a low single digit in the Americas.

However, they fell by a low single figure in its Europe division, hurt by a larger fall in the UK which performed very strongly in the same period in 2016.

Burberry did, however, maintain its operating profit guidance for the full 2017-18 year and said it was on track to make cumulative cost savings of 60 million pounds in the year.

“We are making good progress embedding our strategic vision into the organisation,” said Gobbetti.

Burberry announced in November that Christopher Bailey, the designer who turned the firm into a global label, would leave this year. Wednesday’s statement did not give any update on the search for Bailey’s successor.

Burberry Spring Summer 2018

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