LONDON – COVID-19 disruption in China took a bite out of Burberry’s growth in the important thing holiday trading period, with third-quarter retail revenue flat at constant exchange, and up 5 percent at reported rates. 

Retail revenue was 756 million kilos within the 13 weeks ended Dec. 31, compared with 723 million kilos within the corresponding period last yr. Comparable store sales were up 1 percent, compared with 7 percent within the corresponding period last yr.

In mainland China, certainly one of Burberry’s biggest markets, sales were down 23 percent attributable to lockdowns and the country’s later decision to chill out COVID regulations throughout the period.

Outside mainland China, comparable stores sales advanced 11 percent with the EMEIA region, Japan, South Korea and South Asia-Pacific all notching double-digit growth.

EMEIA, which covers Europe, the Middle East, India and Africa, grew 19 percent, driven by sales to tourists. Sales to EMEIA nationals grew low-single digit within the period, Burberry said. 

Sales within the Americas region fell 1 percent, which Burberry described as “a rather improved performance” over the primary two quarters. Burberry noted that Americans opted as a substitute to spend their dollars within the EMEIA region throughout the holiday period.

Burberry said accessories grew within the double-digits outside of mainland China, driven by a dedicated campaign and a program of business activations for the festive period.

In a report on Wednesday, RBC Capital Markets said Burberry’s retail revenue growth was 5 percent below consensus estimates, however the market “is prone to view the miss as transitory, with the prospect to enhance in 2023.”

China has since relaxed more restrictions and opened its borders to travelers.

“Overall, we’re pleased with our performance within the third quarter as double-digit revenue growth outside of mainland China offset the impact of COVID-19-related disruption there,” said Burberry’s CEO Jonathan Akeroyd.

“We remain confident in our ability to achieve our medium-term targets, despite the present macro-economic environment. We’re focused on executing our plan to appreciate Burberry’s potential as the trendy British luxury brand, and we look ahead to unveiling Daniel Lee’s debut collection for Burberry on our return to London Fashion Week next month.”

The corporate said its full-year outlook stays unchanged and it continues to focus on “high-single digit” revenue growth “with operating leverage ensuring good margin progression, notwithstanding the present macro environment.”

It’s expecting to see a currency tailwind of around 160 million kilos on revenue and 70 million kilos on adjusted operating profit in fiscal 2022-23.

As reported in November, Burberry’s first half revenue rose 11 percent to 1.35 billion kilos at reported exchange, boosted by the weaker British currency. The pound has since strengthened following the arrival of Rishi Sunak as prime minister, and Jeremy Hunt as chancellor of the exchequer.  

At constant exchange rates, revenue rose 5 percent year-on-year in the primary half.