UK. British luxury goods house Burberry Group has reported first-quarter total revenue up by +22%, retail revenue up +14%, with comparable-store sales growth of +4.5%.
For the three months to 30 June 2008, the company turned in good performances in non-apparel and outerwear. Wholesale revenue surged by +43% in the quarter, while licensing revenue increased by +3%.
Strong comparable store growth was seen in the Americas, Europe and Asia, offset by continued weakness in Spain, Burberry said.
For the first half, over +10% increase in revenue is expected, with North America up over +20%.
Commenting on the company’s performance, Chief Executive Officer Angela Ahrendts said: “I am pleased with Burberry’s start to the year in an increasingly challenging external environment. Our brand momentum is strong, driven by product innovation and a focused management team. This momentum, together with the diversity and balance we have across products, channels and regions, underpins our confidence for the future.”
First-quarter results in detail
In the first quarter there was double-digit growth in both the retail and wholesale channels; in Europe, Americas, Asia Pacific and emerging markets; and in womenswear, menswear, non-apparel and childrenswear.
Retail sales, which accounted for over half of total revenue in the period, grew by +14%. As a result of the excess stock in the business at the year-end, proportionally more inventory was sold year-on-year during the usual sale period, which continues into the second quarter. Non-apparel contributed most to retail growth. Product highlights included lightweight outerwear, shoes and other accessories, including belts. Revenue also benefited from earlier Autumn/Winter 2008 receipts.
In the first quarter, when the competitive environment remained volatile, Burberry’s comparable-store sales increased by +4.5%, including Spain which was down double-digits. The Americas remained the best performing region, with particular strength in major cities such as New York, San Francisco and Chicago. Europe and Asia both showed positive comparable sales growth, led by countries including France, Germany and Korea.
During the quarter, Burberry opened mainline stores in Cannes and Budapest, as well as 14 concessions in Italy, Korea and Spain, including four new childrenswear corners. There was a +12% increase in average selling space year-on-year in the first quarter, with +12-13% expected for the year as a whole.
Wholesale revenue surge
For the six months to 30 September 2008, based on orders received to date, Burberry expected wholesale revenue to increase by over +10% year-on-year. Spain was expected to show continued weakness (down double-digits) offset by good growth in all other regions, especially North America (up by over +20%) and emerging markets.
In what is a small quarter for wholesale, revenue in the first quarter surged by +43%, reflecting earlier shipments of Autumn/Winter 2008 merchandise. As a result of these earlier deliveries, all regions except Spain saw exceptional growth. The majority of first-half wholesale merchandise will continue to be delivered in the second quarter of the year, it said.
Sales to emerging markets doubled in the first quarter, largely reflecting earlier wholesale shipments, particularly to China. Comparable-store sales growth in the franchise stores was “very strong” in the Middle East and Russia and a new store was opened in Baku, Azerbaijan, according to Burberry.
Total licensing revenue in the first quarter edged up by +3%, benefiting from phasing differences year-on-year. Excluding these, Japanese volumes in apparel and non-apparel were marginally down in the quarter, offset by good growth in global licences, especially fragrances and timepieces. This performance is consistent with Burberry’s expectation for the full financial year of broadly flat licensing revenue.
At 30 June 2008, Burberry had 97 retail stores globally, with 245 concessions, 41 outlets and 80 stores operated under franchise.
MORE STORIES ON BURBERRY
Burberry buoyed by third-quarter sales boom – 15/01/08
Luxury bags carry Burberry to profits rise – 14/11/07
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