LONDON — Burberry Group plc reported a 22 percent rise in third-quarter revenues Tuesday, driven by strong sales of outerwear and large leather goods, along with a surge in sales in the Asia-Pacific region.
Revenues rose to 574 million pounds, or $901.2 million, in the three months to Dec. 31, from 470 million pounds, or $737.9 million, in the same period last year. Including the now-discontinued Spanish operations in the comparison, which contributed 10 million pounds in the third quarter of 2010, revenues rose 19.6 percent. Dollar figures have been calculated at average exchange rates for the period.
Angela Ahrendts, chief executive officer of Burberry, said the figures marked a “strong performance” for the brand. “Our investment in flagship markets and digital technology has enabled our global teams to continue to drive customer engagement, enhance retail disciplines and improve operational effectiveness, further strengthening brand momentum,” she stated.
Retail sales, which represent 70 percent of Burberry’s revenues, grew 24 percent to 417 million pounds, or $654.7 million. On a same-store basis, retail sales grew 13 percent. Along with sales of large leather goods and outerwear, sales of Burberry London products, knitwear, men’s accessories and tailoring were among the categories driving revenues, Burberry said. Wholesale sales rose 16 percent to 130 million, or $204.1 million, the company said, benefitting from an improved supply chain and flow of product.
In terms of regions, Asia-Pacific grew the most, with revenues there rising 39 percent to 210 million pounds, or $329.7 million. In China particularly, same-store sales increased 30 percent during the period. And the company said its “flagship markets,” including London, Paris, Beijing and Hong Kong, all “outperformed,” driven by purchases by traveling luxury consumers. On that note, Stacey Cartwright, executive vice president and chief financial officer at Burberry, said the company is “just as prepared” for Chinese New Year, which begins Monday, in its London stores as it is in Beijing.
Europe’s revenues grew 21 percent to 160 million pounds, or $251.2 million, while the Americas grew at a far slower rate of 4 percent to 148 million pounds, or $232.4 million.
Cartwright said that in terms of wholesale growth in the Americas region, Burberry’s sales into major department stores were “up in the teens” in terms of percentage growth, but that rise had been offset by Burberry not continuing with its sales of off-price merchandise, which she said is part of Burberry’s strategy of “elevating the brand and walking away from activities that are not brand enhancing.” Retail performance in the Americas was up “high single digits” Cartwright said, against strong double-digit comparisons in the same period last year.
Licensing revenue grew by 19 percent during the quarter, to 27 million pounds, or $41.6 million. The company said eyewear and fragrance showed “excellent” growth, the latter boosted by the launch of the Burberry Body fragrance.
In a research note Tuesday, Freddie George at Seymour Pierce said the figures “should be received positively by the market. Burberry has excellent strategic growth opportunities in a luxury market with strong long-term growth credentials,” he said. “There are significant geographical and product mix opportunities plus operational leverage still to come from infrastructure investment over recent years.”
Ahrendts stated that the company continues to stay mindful of “the challenging macroenvironment,” while “executing our proven core strategies to achieve long-term sustainable growth.” The company plans to increase its retail space between 13 and 14 percent in the second half, and expects its wholesale sales to increase by “midsingle digits” in the second half.
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