Burberry sales suffer over holidays as new CEO pushes change

PARIS: Burberry Group Plc’s holiday sales fell short of estimates as Chief Executive Officer Marco Gobbetti began implementing his plan to give the U.K.-based trench-coat maker a high-fashion facelift.

Retail revenue rose 2% on a comparable basis for the quarter ended Dec. 31, only half the rate analysts estimated in a Bloomberg News survey. Sales were held down by a decline in the U.K. after a strong period a year earlier when the London-based company benefited from an influx of tourists taking advantage of the weak pound. 

The shares fell as much as 5.3% early Wednesday in London.

The weak quarter “should not come as a huge surprise given the exceptionally difficult U.K. comparative and the transition phase that Burberry is going through,” RBC analyst Rogerio Fujimori said in a note.

Gobbetti, who took over as CEO last year, revealed plans in November to boost the brand’s image with flashier stores and a focus on handbags. The shares fell the most in five years that day as investors digested the costs of the plan.

As designer and former CEO Christopher Bailey prepares to leave the company, it’s unclear who will design the “it” bags that are central to the brand’s upmarket ambitions. Burberry did not provide any updates on the search for a new creative director.

Louis Vuitton said Wednesday that menswear creative director Kim Jones was leaving the company, adding another name to the list of possible candidates to succeed Bailey. Jones has been known for mixing high luxury with hip streetwear influences at the LVMH-owned luggage maker and fashion house.

Burberry left its guidance for operating profit in the full fiscal year unchanged, saying it was on track toward the new CEO’s strategic goals. Quarterly revenue in the U.S., a persistent problem area, was flat. - Bloomberg