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Burberry Revenue Rises to $899.5M

Burberry's first-half revenues rose 14.5 percent to 449 million pounds, or $899.5 million, from 392 million pounds, or $725.5 million, with some of the fastest growth coming from nonapparel categories.

LONDON — Burberry’s first-half revenues rose 14.5 percent to 449 million pounds, or $899.5 million, from 392 million pounds, or $725.5 million, with some of the fastest growth coming from nonapparel categories.

The company published revenue figures on Tuesday, and will release full profit and sales results for the six months to Sept. 30 on Nov. 14.

“We are delighted with the first half, and especially with the accelerated growth in the second quarter,” said Stacey Cartwright, Burberry’s chief financial officer, in an interview.

In the three-month period to Sept. 30, retail sales grew 21 percent, compared with 18 percent in the first quarter. In the first half, retail sales overall accounted for 45 percent of revenues.

One of the biggest drivers behind sales in the period was accessories, which grew by 35 percent year-on-year. Some of the bestsellers so far have been the Knight bag and the metal studded runway shoes and accessories.

Angela Ahrendts, Burberry’s chief executive officer, said in an interview that other drivers in nonapparel included scarves, small leather goods, belts and jewelry.

Tuesday’s statement added that business was growing so rapidly that certain phases of Project Atlas, Burberry’s IT and supply chain overhaul program, have had to be put on hold.

“Business growth has been so phenomenal that implementing our planned warehousing changes now would not have been practical,” said Cartwright. As a result, the company has postponed its warehouse update until the third quarter.

Overall Atlas costs for the financial year will jump to 19 million pounds, or $38.1 million, from 15 million pounds, or $27.9 million, due to the change. However, the statement said Atlas remains on track to deliver the planned 20 million pound, or $40 million, benefit to the bottom line in the 2007-2008 fiscal year. All currency conversions have been made at average exchange rates for the respective periods.

Licensing revenues remained broadly flat in the first half, shrinking 2.4 percent to 40 million pounds, or $80.1 million, from 41 million pounds, or $79.9 million. Cartwright said this was partly due to the phasing out of certain agreements in local markets, including shirting in Germany and the U.S., and tailored clothing in Italy. “We’ll start to see a pickup at retail and wholesale in these categories.”

This story first appeared in the October 17, 2007 issue of WWD.  Subscribe Today.

And while growth in Europe has been strong — sales rose 33 percent in the half — Spain remains a challenge. Sales in that country fell 5.7 percent, and Burberry said that market is expected to show “further weakness” in the second half.

The brand recently switched its wholesale accounts with El Corte Inglés to Burberry-run concessions. Cartwright said that business is doing “extremely well.” What is suffering are the residual, wholesale men’s wear accounts and independent mom-and-pop accounts in Spain.

Still, Burberry’s wholesale performance in the second half is expected to show an underlying midteen percentage increase, excluding the expected negative impact of Spain.

Worldwide, retail selling space in the second half is expected to expand a further 12 percent, on top of the 12 percent increase in the first half.