Burberry holiday sales miss estimates as CEO pushes brand's facelift

Paris

BURBERRY Group's holiday sales fell short of estimates as chief executive officer Marco Gobbetti began implementing his plan to give the UK-based trench-coat maker a high-fashion facelift.

Retail revenue rose 2 per cent on a comparable basis for the quarter ended Dec 31, the London-based company said on Wednesday, missing the 4 per cent growth predicted by analysts in a Bloomberg News survey.

Mr Gobbetti 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 is 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.

The company on Wednesday left its guidance for operating profit in the full fiscal year unchanged, saying that it was on track towards the new CEO's strategic goals. Quarterly revenue in the US, a persistent problem area, was flat.

"The root cause of Burberry's recent lacklustre growth performance is its inability to 'wow' consumers and grow the top line," said Luca Solca, an analyst at Exane BNP Paribas. "The planned departure of Christopher Bailey opens the opportunity for Burberry to turn the page, and seek new creative talent," he added. BLOOMBERG