Burberry announced its six months trading results this week and saw retail revenue up 14% with comparable store sales growth of 2%. Europe and Asia saw double-digit growth, whereas the United States and Spain remained down. Wholesale revenue was down 23% in line with guidance given in April 2009. Licensing revenue was down 6% underlying (up 13% reported).
Angela Ahrendts, Chief Executive Officer, commented: “Having completed a strong second quarter, Burberry delivered a solid first half revenue performance. During the period, we achieved further strategic progress, highlighted by good non-apparel growth, the strengthening of our position in Japan and continued brand investment, as demonstrated by Burberry’s return to London Fashion Week. In this uncertain environment, the team at Burberry remains focused on executing to capitalise on all available opportunities.”
Total sales in the first half declined by 5% at constant exchange rates, up 6% reported. Retail sales increased by 14% on an underlying basis, while wholesale revenue declined by 23%, in line with guidance. Non-apparel, especially handbags and small leather goods, performed well, driven by innovation in the iconic programmes. Burberry further reduced inventory levels during the half, partly reflecting lower procurement as well as stronger full price sales in the second quarter (which helped gross margin). There has been a significant improvement in the cash position since the year-end. The global cost efficiency programme, announced in January 2009, was fully implemented during the first half.
Retail sales, which accounted for over 50% of total revenue in the first half, increased by 14% on an underlying basis (up 27% reported). New space generated 8% of this growth and Burberry Middle East contributed 4%.
Comparable store sales grew by 2% in the first half (Q1: flat; Q2: +5%). The acceleration in the second quarter was due primarily to a positive response from consumers to the Autumn/Winter 2009 collection, especially non-apparel and casual outerwear. By region, first half comparable store sales in Europe and Asia remained up double-digit, while the United States and Spain were down double-digit. The UK and Korea were again the best performing markets (with spending boosted by favourable currency movements).
In the first half, Burberry opened nine mainline stores including its first flagship store in Singapore (Ion Orchard) and one in Omotesando, Tokyo (previously under franchise), which is the first store operated within the luxury non-apparel joint venture. Six mainline stores were closed as part of the global cost efficiency programme. Overall in the first half, there was a 12% net increase in average selling space year-on-year.
Image: Burberry AW09
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