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UPDATE 2-Burberry says new designer bringing buzz back to brand

Updated: 08-11-2018 15:12 IST
Burberry's new creative designer has had an "exceptional" response to his debut collection, but it will take time to turn around a business where first-half revenue and operating profit both fell, the luxury brand said on Thursday.

Former Givenchy star Riccardo Tisci's first designs for the British label were praised by critics and buyers alike when they were shown in September.

"The initial response from influencers, press, buyers and customers to our new creative vision and Riccardo's debut collection 'Kingdom' has been exceptional," Chief Executive Marco Gobbetti said.

But he said his multi-year turnaround was only in the first phase and translating the buzz around the brand into better financial results would take time.

While luxury brands are riding a rebound in Chinese demand and strong interest from younger shoppers, Burberry has lagged rivals such as LVMH's Louis Vuitton and Kering's Gucci, leading to Tisci's appointment in March.

Burberry reported revenue of 1.22 billion pounds ($1.60 billion) for the 26 weeks to Sept. 29, down 3 percent but ahead of analyst forecasts, and adjusted operating profit of 178 million pounds, down 4 percent.

It said its outlook for the full year, including 100 million pounds of cost savings, was unchanged.

Chief Financial Officer Julie Brown said the response to Tisci's collection, which will be in store in February, had been strong, with wholesalers in Europe, Middle East and Africa doubling their previous order levels.

Burberry is rationalising its wholesaler network, particularly in the United States as part of its strategy to elevate the brand into the higher levels of luxury.

Shares in the company, which have risen 2 percent this year, were up 0.7 percent to 1,828.5 pence at 0815 GMT.

Analysts at Citi, who have a "neutral" rating on the stock, said the turnaround plan was on track.

"While we appreciate the continued focus on new product initiatives, refreshed store concept, sales productivity, ecommerce and cost control, the jury's still out on the timing and magnitude of brand turnaround," they said.

Burberry kept its full-year guidance for broadly stable revenue and adjusted operating margin at constant exchange rates.

($1 = 0.7615 pounds) (Reporting by Paul Sandle; Editing by Sarah Young and Mark Potter)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)