Did Investors Overreact To 2016 Results From This Fashion Icon
Sign in canada goose outlet uk sale / Join NowBurberry (OTCPK:BURBY) impressed me when I last reviewed it canada goose uk outlet at the start of 2016. Yet today it uk canada goose released it FY 2016 canada canada goose coats on sale goose outlet results which seem cheap canada goose uk to have left investors unimpressed. Their London listed canada goose outlet parka shares Canada Goose sale dropped as much as 6% in response. canada goose outlet reviews Chief Designer and CEO Christopher Bailey also faced further questions as to canada goose coats whether he is up to the dual demands of his role.As it happens, I think he is doing a good job on both the design and corporate Canada Goose Online front but perhaps a co CEO with broader commercial experience would be welcome. Yet, as I note, I think he is canada goose uk shop doing a good job. Looking at Burberry’s FY results seems to justify this view.All told, I think investors’ negative reaction to the results were overplayed. Let’s take a look at what I canada goose outlet jackets mean.Top and Bottom Line Woe?It may not be obviously apparent why canada goose outlet toronto buy canada goose jacket cheap factory I still like Burberry from their top and bottom line figures. They were hardly attractive with an underlying revenue shrinkage of 1% and Canada Goose Coats On Sale operating income of 11%.Note: For readers used to looking canada goose outlet sale at companies reporting in canada goose clearance USD, remember to recalibrate your eyes: Underlying (that is, currency neutral) results are lower than reported results. Burberry’s results are declared in GBP.Central to this slight decline in revenue canada goose outlet store is Burberry’s Asian canada goose uk black friday market. With the slowdown in Canada Goose Outlet Asia it is unsurprising to see that it was here that the slowdown in growth was most marked from both a reported and underlying basis:As important as the Asia Pacific market is, however, note that Burberry canada goose is well diversified across the canada goose outlet black friday globe. Indeed, the EMEIA region (Burberry’s second largest) pulled out an impressive performance during the year. This is very encouraging to see. The biggest worry for some was the decline in profit. Understandably, seeing profit decline 11% on underlying performance is not what you want to see. canada goose outlet shop Similarly, finding yourself faced by further declines in margins performance is hardly happy reading:Yet, let’s be clear, Burberry (even faced with a tough luxury market) was able to produce goose outlet canada margins canada goose outlet store uk Canada Goose Jackets above 16%. Certainly, I’d like to canada goose outlet online see them heading back up towards 20% canada goose black friday sale again sooner rather than later. Yet it can hardly be argued they are operating on wafer thin margins we should worry about.There is more. It is important to recognize that a significant driver of this profit drop was licensing canada goose outlet online uk profit. The core Retail/Wholesale segment still declined in profitability, yet canada goose outlet new york city at buy canada goose jacket a slower 4.6%:In contrast, Licensing saw much heavier declines:Now, although licensing only composed less than 3% of revenues in 2015, canada goose outlet canada it contributed over 12% of profit:A profit decline like this in Canada Goose Parka the licensing canada goose jacket outlet segment canada goose outlet in usa was always going to have a sizeable effect of total company profit. Yet this decline was, as we shall see, entirely expected by the canadian goose jacket company and (peculiarly enough) to be encouraged. Up until June 2015 Burberry licensed their products in this luxury goods growth market. Yet this resulted in them losing a great deal of control over uk canada goose outlet their brand there.The move official canada goose outlet is attractive over the long cheap Canada Goose term. Japan remains a key canada goose outlet uk driver of luxury goods growth in the future. Controlling their brand (ultimately, their most valuable asset) is therefore of paramount importance. Yet the shift from licensing means they have to then build up their retail offering there. Prior to the termination of the licensing agreement, over 400 stores in the country sold their branded canada goose store goods. Although making progress, Burberry is canada goose factory sale still only starting its process of rebuilding its presence canada goose black friday sale through direct retail offerings:Clearly they still have some way to go to build up their physical store footprint in the country. Yet progress canada goose outlet on sale is being made. Revenue doubled from this fresh direct retail position in Japan (although, admittedly, from a small base).That is a nice movement in debt. Yet it is matched by an equally nice trend in shareholders’ equity:The effect is telling. canada goose factory outlet For those of you who like to Canada Goose online see a small debt to canada goose clearance sale equity level you’re in luck. Burberry’s is miniscule:This is a company, therefore, continues to piloshop be in great canada goose outlet nyc health. This comes across even clearer when we look at it from a cash flow perspective.