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Burberry sales drop 3 percent in the first quarter

Burberry reported a 3 percent drop in like-for-like sales in a “challenging” first quarter, underlining the size of the task facing Marco Gobbetti when he takes over as chief executive from Christopher Bailey next year.

The luxury goods group said a positive 3 percent contribution from new stores resulted in flat retail sales of 423 million pounds, slightly better than analysts’ expectations.

Burberry benefits from a drop in the value of the pound after Britain voted to leave the European Union last month. It said its adjusted profit for the year would be boosted by about 90 million pounds if exchange rates remain at current levels, compared with a previous forecast of a 50 million pound boost.

Burberry announced the appointment of Gobbetti, the Italian boss of LVMH brand Celine, on Monday. Bailey will become president as well as retaining his creative role.

The firm is struggling to counter a sales downturn in mainland China and Hong Kong and fewer tourists in Europe after attacks in Paris and Brussels.

It said like-for-like sales fell in all regions in the three months to June 30. ”The external environment remains challenging and underlying cost inflation pressures persist,” it said.

The company said in May it expected profit to come in towards the bottom end of forecasts, which at that time ranged from 375 million to 449 million pounds.

Mindful of the currency movements, analysts expected adjusted pretax profit for the full year of 410 million pounds on average before Wednesday’s update.

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