WWD.com/beauty-industry-news/financial/burberry-sales-rise-3-percent-in-q3-587794/

LONDON — Burberry sales in the third quarter ending Jan. 1 rose 3 percent to approximately 161 million pounds, or $301 million at current exchange, driven by growth in its retail and licensing divisions.

The third-quarter sales compare with revenues of 157 million pounds, or $294 million, in the corresponding period a year earlier.

The company said in a statement Wednesday that sales were on target with management’s expectations, and the company had “held its course” in a highly promotional environment. In the statement, Burberry reported exact percentage gains, but rounded off the third-quarter sales numbers. 

“We definitely managed for profit and resisted the temptation to go for extra discounting,” said Stacey Cartwright, Burberry’s chief financial officer, in a telephone interview. “It was a challenging environment, and apparel has been the toughest category, but we’re pleased with the results in the quarter.”

Retail sales, which accounted for 59 percent of total revenues in the period, grew 1 percent to approximately 96 million pounds, or $180 million, from 94 million pounds, or $176 million, thanks chiefly to newly opened and refurbished stores in places like Rome, Paris, San Francisco and Boca Raton, Fla.

Average selling space increased 8 percent in the quarter.

In the U.S., retail sales grew in line with increased floor space and despite what the company called a “challenging outerwear season” and a “muted response” to some classic styles.

Continental Europe performed well,  but sales in the U.K. were weak. “Part of the reason is that we’re not getting U.S. tourists in London. That’s due to the weak dollar,” Cartwright said.

Sales in Hong Kong and Southeast Asia were vigorous, while those in South Korea continued to be volatile due to the difficult macroeconomic environment. As a result, Korean sales were flat in the quarter.

Wholesale sales in the period, which accounted for about 29 percent of revenue, rose 2 percent to approximately 47 million pounds, or $87.9 million.

The statement stressed that spring wholesale shipments are concentrated in the fourth quarter of the financial year, and the company expects mid- to high single-digit growth for the spring season. The fourth quarter ends on March 31.

This story first appeared in the January 13, 2005 issue of WWD.  Subscribe Today.

With regard to the spring collections, Cartwright said there are already waiting lists in the U.S. and the U.K. for the Prorsum Cinda bags. The bags, which come in checked and saddle tan, retail for 495 pounds, or $926.

“We’re getting them into the stores as fast as we can,” she said, adding that another big seller is the Brit Red fragrance. “It’s been blowing out of certain stores in the U.K.,” she added. The company will be repackaging the scent for Valentine’s Day.

Licensing revenue increased by 15 percent to approximately 18 million pounds, or $33.7 million, from 16 million pounds, or $29.9 million. The company said increases in royalty rates offset declines in the Japanese market from licensee cancellations or transitions and a soft apparel market.

In the fourth quarter, Burberry plans to increase retail selling space a further 7 percent thanks to the opening of at least two concessions. In the 2005-06 financial year, the group has signed leases for stores in Naples, Fla., and San Antonio.

The company said it would issue a trading update for the second half of the 2004-05 fiscal year on April 13.