Burberry’s sales rocket 15 per cent

Burberry Group plc, the global luxury company, on Tuesday reported trading for the three months to 31 December 2009 saw a 15 per cent rise in sales to £380m. The company said retail sales were up 17 per cent with strong comparable store sales growth, greater full-price sell through of the winter collection as significantly lower inventory going into the last quarter. Burberry’s wholesale revenue was up 11per cent, driven by more frequent deliveries.

Angela Ahrendts, Chief Executive Officer, commented: “With sales up 12 per cent underlying in the third quarter, Burberry has delivered a strong performance in both retail and wholesale, as customers around the world responded positively to our collections, marketing and service initiatives. As a result, we currently expect adjusted profit before tax for this financial year to be towards the top end of market expectations. While continuing to plan cautiously for 2010/11, we are confident that our strategies by product, region and channel – underpinned by operational efficiencies – will drive profitable growth.”

Retail sales, which accounted for around two-thirds of total revenue in the quarter, increased by 16 per cent on an underlying basis (17 per cent reported), of which new space contributed 6 per cent.

Comparable store sales increased by 10 per cent. There were good performances from outerwear (more innovation and diversification in this core category) and from non-apparel (continued product development in soft accessories, successful capsule collections in large leather goods and a broader offer in shoes). Digital media initiatives helped to drive traffic, while the Burberry Experience sales and service programme helped to drive conversion. With strong full price sell-through of the Autumn/Winter collections and reduced procurement, inventory levels at 31 December 2009 were significantly lower year-on-year. As planned, this will reduce clearance activity in the current fourth quarter compared to last year, impacting revenue but benefiting gross margin.

Comparable store sales in the third quarter grew in all regions. Double-digit growth continued in Europe and Asia Pacific, led by the UK and Hong Kong. Comparable store sales in the Americas improved to low single-digit growth, albeit against weak comparatives last year. Spain grew marginally in what remains a challenging market.

During the third quarter, Burberry opened a net five mainline stores, of which three were in the Americas (a flagship in Toronto and standalone Burberry London and Burberry Brit stores at Madison Avenue, New York). Average selling space for the second half is planned to increase by about 6 per cent year-on-year, giving a full year increase of 8-10 per cent in line with previous guidance.

Image: Burberry Prorsum AW10