LONDON — A growing portfolio of standalone stores, solid demand in the U.S. and a booming fragrance business boosted Burberry’s sales by 9.6 percent to 113.7 million pounds, or $200.1 million, from 103.7 million pounds, or $182.5 million, in the first quarter ended June 30.
All figures have been converted at current exchange.
The firm said in a statement Wednesday it also plans to buy the 12 retail stores and concessions belonging to its Taiwanese distributors for 9 million pounds, or $15.8 million, in cash. The purchase, to be completed in August, is expected to contribute 2 million pounds, or $3.5 million, to the company’s operating profit for the 2006-07 fiscal year.
“It’s been a good start to the year, and we’re encouraged by the response we’ve seen to the fall 2005 collection. It’s only been in the stores a few weeks, but there’s been a good reaction to it,” said Stacey Cartwright, Burberry’s chief financial officer, in a telephone interview.
Cartwright reiterated the company was expecting first-half wholesale sales to be broadly flat against the corresponding period last year, while Burberry’s net retailing area would grow by 8 percent in the fiscal year, not including the Taiwan acquisition.
Burberry chief executive officer Rose Marie Bravo said in a statement that she was pleased with the performance in the quarter and “encouraged” by the initial consumer response to the fall 2005 merchandise.
Burberry’s most recent results beat analysts’ expectations and provided a boost for the company, which has been suffering from tough comparisons with previous quarters. In addition, consumer response to the spring 2005 collections had been muted in certain key markets, including the U.S.
Retail, which accounted for some 53 percent of total revenue in the period, grew 9.4 percent to 60.8 million pounds, or $107 million, from 55.6 million pounds, or $97.9 million. The company said the growth was driven by contributions from newly opened and refurbished stores and “marginal gains” at existing stores.
Year-on-year average selling space increased by 8 percent in the period, with new stores in Spain and South Korea, among other places.
The statement said both full-price and outlet sales in the U.S. were strong in the quarter. European sales were driven by new stores and concessions, although the U.K. remains soft. Hong Kong and Southeast Asian markets also performed well.
This story first appeared in the July 14, 2005 issue of WWD. Subscribe Today.
Wholesale sales grew 4.6 percent to 38.7 million pounds, or $68.1 million, from 37 million pounds, or $65.1 million. The statement pointed out the bulk of wholesale shipments are concentrated in the second quarter of the fiscal year.
Burberry’s licensing division continues to build momentum, thanks chiefly to the lucrative royalties deal the company forged last year with the Paris-based Inter Parfums SA. As reported, there is now a separate Burberry Fragrances division at Inter Parfums, which is managing what is becoming a powerhouse brand.
Total licensing revenues in the quarter increased 28 percent to 14.2 million pounds, or $25 million, from 11.1 million pounds, or $19.5 million. A decline in royalties from Burberry’s Japanese business — which is undergoing a restructuring — was offset by increased royalty payments from the fragrance business.