UK. Burberry today announced its interim results for the six months ended 30 September 2008 showing an increase in revenues and profit, but warned that trading had become ‘difficult’, particularly in the US market.
Total revenue climbed by +20% to £539m, with operating profit of £98.4m, up +3%. Profit before tax edged up +1% to £97 million. Comparable store sales growth increased by +3%. Five mainline stores opened during the period.
Wholesale revenue surged by +23% (15% underlying). Regionally, the Americas, Europe and emerging markets all performed strongly.
Licensing remained unchanged (down -3% underlying); good growth was seen in global product licences, especially fragrances, the company reported.
Double-digit growth was registered in all regions, except Spain. A Middle East joint venture with Jashanmal has been formed (see separate story) in a “high-growth market”. In addition, a joint venture is being finalised for non-apparel in Japan, the largest luxury accessories market in the world.
Double-digit growth was achieved in all product categories, with non-apparel up +20% to contribute 31% of revenue. Outerwear and innovative check performed strongly, according to Burberry.
Outlook
“In line with other luxury companies, trading has become more difficult since the start of second half, particularly in the US,” Burberry said in a press release, although it noted that peak season trading was to come.
“If initial trends continue, adjusted profit before tax would be in mid to lower half of current range of market expectations,” the company forecast.
Cost efficiencies of £15-20m for 2009/10 had been identified, thanks to investments made in supply chain, IT and infrastructure. The company said it was reviewing further significant savings to underpin profitability.
Commenting on the interim results, Burberry CEO Angela Ahrendts said: “The fundamentals of Burberry remain strong, despite the current very challenging environment. With our supply chain and IT investments in their final phases, we are now in a position to drive significant efficiencies in the near term. These benefits, along with continued investment in the business, our seasoned management team, strong brand perception and proven strategies underpin our confidence in the future long-term growth of Burberry.”
She added: “I am also delighted today to announce two joint ventures with long-standing partners – the first in the Middle East [with Jashanmal; see separate story – Ed] and the second for non-apparel in Japan – both of which will accelerate our growth in these key regions.”
MORE STORIES ON BURBERRY
Burberry inks Middle East joint venture deal – 18/11/08
Burberry first quarter booms as accessory sales soar – 15/07/08
