Upbeat Burberry shrugs off credit squeeze

Burberry on Wednesday shrugged off fears that the financial crisis was affecting luxury goods as it reported a 25 per cent rise in annual pre-tax profits and said it expected strong growth in the US market.

But towards the end of the second half, Burberry said sales were more volatile in stores.

Stacey Cartwright, finance director, said: “It has become difficult to extract trends. We are seeing volatility not so much in specific regions but within stores, some days sales are significantly up, and others significantly down.”

The company, which last year outlined plans for a rapid US expansion, said it expected a strong performance in this market in the six months to September, as it capitalises on a fondness for the British brand. It anticipates growth of more than 20 per cent during this period.

Ms Cartwright said: “We continue to see double-digit sales growth in the US. We are very under-penetrated in this market. There is lots more to go for there.”

Burberry’s upbeat statement follows weaker-than-expected sales from Gucci last month, which prompted several analysts to predict a possible shake-out at the lower end of the luxury goods market, with more aspirational brands suffering more than traditional, exclusive names.

Ms Cartwright brushed off suggestions that Burberry might be more vulnerable to a downturn, pointing to underlying growth across the business of 18 per cent during the year.

Burberry forecast good growth in the first half in all of its regions except Spain and 20 per cent growth in emerging markets for the wholesale division for the six months to September.

It expects average selling space to increase 12-13 per cent year on year and wholesale revenues in the six months to September 2008 to grow about 10 per cent on an underlying basis.

It anticipates broadly flat underlying licensing revenues in the year to March 2009, and a £2m boost to revenues and profits as a result of the yen exchange rate.

Revenues rose by 17 per cent to £995.4m while pre-tax profits rose to £195.7m. Earnings per share were 32.4p compared with 29.7p last time.

Angela Ahrendts, chief executive said: “Burberry’s revenue growth and profit increase demonstrate the robustness of our global luxury business in these challenging times, with consistent performance across our regions, channels and products.”

Source: Financial Times

Burberry's sales jump 18%

Luxury group Burberry posted an 18% sales increase in its second half, revealing double digit growth in its retail and wholesale divisions.

Retail sales, which accounted for over 50% of total revenue in the second half, increased 17% on an underlying basis. Non-apparel continued to outperform driven by sales of handbags, footwear and accessories. In apparel, growth was driven by outerwear, knitwear and dresses. Nine stores and around 40 concessions were opened during the period.

Wholesale, which accounted for 40% of total sales, soared 25% on an underlying basis. As with retail, non-apparel and outerwear were the best performing categories. Based on orders received to date, Burberry expects wholesale revenue to jump around 10%, on an underlying basis, in the six months to September.

However, licensing revenue remained flat, as expected.

Burberry chief executive Angela Ahrendts said: "Burberry had a good finish to the year, against the background of an increasingly challenging external environment. Looking forward, we are thrilled with the momentum of our brand as our core luxury, retail and non-apparel strategies continue to gain traction, while our seasoned management team focuses on improving the operational aspects of our business."

This year, the group expects to open around 15 stores, and increase retail space by up to 13% year-on-year.

Source: DrapersOnline