Jan 18, 2017

Burberry: beyond sterling

The latest trading update showed third-quarter sales boosted by overseas bargain-hunters flocking to its UK stores for its signature trenchcoats, handbags and other wares. Because Burberry makes products in the UK, the currency boost is more than mere translation. UBS research suggests that at around €1,600 per square foot annually, Burberry's sales density is well below that of European peers, while its operating expenses are higher. Management outlined plans last year to boost productivity, noting that each 5 per cent rise in sales density generates £90m of additional revenue. Increasingly, such long-term improvements are more likely to drive the shares than currency-related boosts to trading.

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