Financial News

  • 11 July 2014, 13:19

Fashion Firms' Strong Sales Amid Pound Fears

Robust sales performances have been reported by a clutch of British fashion firms, but some have voiced concerns about the strong pound.

Shares in luxury brand Burberry rose 2% on the FTSE 100 early on Thursday after it confirmed a 12% rise in like-for-like sales for the three months to the end of June.

But it warned that profits will be affected by currency fluctuations - with a £55m hit anticipated as sterling trades at six-year highs.

There was a similar prediction from Associated British Foods (ABF) - the owner of discount chain Primark.

It said that while the strengthening of the pound would dent earnings to the tune of about £50m, the effects would be outweighed by Primark's sales performance.

A 22% increase in Primark's sales at constant currency in the 16 weeks to June 21, its fiscal third quarter, was credited for an increase in the parent's annual earnings guidance.

The performance, ABF said, was helped by warm weather and new store openings.

SuperGroup - Superdry's owner - reported a 19.6% rise in annual revenues to £430.9m though profits fell as it invested in new store openings overseas.

Burberry's results were the first under new chief executive, Christopher Bailey, who also remains its chief creative officer following the departure of Angela Ahrendts to head Apple's retail operation.

He said: "This first quarter performance reflects our focus on striving to give customers the best possible experience of the Burberry brand through ongoing investment in retail, digital and service, both on and offline.

"The 12% increase in comparable sales demonstrates our teams' success in unlocking the benefits of these investments, as we continue to concentrate on the things we can control in an uncertain external environment."

Mr Bailey, whose appointment was seen as something of a surprise given his creative rather than executive background, is facing the prospect of a revolt over his pay package.

The company's Annual General Meeting on Friday is expected to witness hostility to pay plans that could earn Mr Bailey more than £25m.

Burberry has consistently argued that its executive pay structure is in line with that of its major rivals.

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