Revenue Gain, HQ Sale Lift Burberry

Profits at Burberry Group plc shot up 32 percent to 66.1 million pounds, or $132.4 million, from 49.9 million pounds, or $92.3 million, in the six months ended Sept. 30.

LONDON — Profits at Burberry Group plc shot up 32 percent to 66.1 million pounds, or $132.4 million, from 49.9 million pounds, or $92.3 million, in the six months ended Sept. 30.

The increase was due to a rise in first-half revenues as well as a 15.1 million pound, or $30.2 million, gain from the sale of Burberry’s central London headquarters in Haymarket, just off Piccadilly, the company said Wednesday.

Burberry staff will relocate to new offices, in Westminster near the Thames river, in late 2008. All figures have been converted at average exchange rates for the respective periods.

Last month, the company reported that revenues in the six months ended Sept. 30 rose 14.5 percent to 449.1 million pounds, or $899.5 million, from 392 million pounds, or $725.5 million, with some of the fastest growth coming from the nonapparel category.

During a press conference Wednesday, chief executive Angela Ahrendts laid out plans for the company, and was upbeat about the outlook for luxury — despite potential repercussions from the subprime mortgage crisis in the U.S.

“We’re still rather bullish on luxury. The luxury customer tends to be insulated from market changes,” she said. “We’re also looking to emerging markets like the Middle East, Russia and China. We feel very strongly about their potential.”

Burberry has just opened its 34th Chinese store, in Beijing, and has one Indian unit, in Bombay, and one in the works in New Delhi, due to open next year. The company also plans to get behind its children’s business, especially in Asia where it’s mulling the idea of children’s wear-only stores.

In the U.S., sales in the first half rose 29 percent, compared with a rise of 18 percent in the 2006-2007 fiscal year. Burberry currently has 61 retail units in the U.S., in addition to 105 department and specialty store wholesale accounts.

One of the biggest drivers behind sales was accessories, which grew by 35 percent year-on-year. Luxury handbags — including the best-selling Knight style — generated more than 50 percent of retail sales in the nonapparel category.

Eighteen months ago, Ahrendts said, Burberry’s luxury handbag offering was tiny and represented 2 to 3 percent of the total nonapparel business. Ahrendts added handbag sales show no signs of slowing, and that other nonapparel categories are following suit. She said the shoe category is still small, but that sales had more than doubled in the first half.

This story first appeared in the November 15, 2007 issue of WWD.  Subscribe Today.

The ceo said Burberry offers everything from sneakers and espadrilles to runway shoes costing 350 pounds, or $700 — and they’re all doing well. Sunglasses, she said, are booming worldwide, and the company will continue to test jewelry.

“We don’t intend to go into the fine jewelry business, but we will offer what we call ‘fine costume jewelry.’ We offer a range of jewelry that corresponds to all of our product categories,” she said.

Stacey Cartwright, chief financial officer, added that accessories overall were having a “halo effect” on sales. “We see the customer come in the store to buy the bag, and they end up walking out with the bag — and a trenchcoat,” she said.

Next year, Ahrendts said, Burberry will continue to focus on nonapparel, and also make a major push into men’s wear, which currently represents about 28 percent of overall sales.

“We really want to put the microscope on men’s wear — we’re owed some business there,” said Ahrendts, adding Burberry planned to push outerwear in particular.

“Right now, we do more business in women’s outerwear than men’s. Although Burberry has always been known for men’s outerwear, under Rose Marie, the women’s outerwear business skyrocketed,” said Ahrendts, referring to her predecessor as ceo, Rose Marie Bravo. She said the company had recently bulked up its men’s wear team, who now all report to creative director Christopher Bailey.