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Burberry Revenues Rise 4.6 Percent in Quarter

Wholesale revenues expected to be down 15 percent in current half due to "cautious buy."

LONDON — First-half revenues at Burberry Group plc rose 6.1 percent to 572 million pounds, or $915.2 million, from 539 million pounds, or $862.4 million, boosted by favorable exchange rates and nonapparel such as handbags, small leather goods, scarves and shoes.

This story first appeared in the October 15, 2009 issue of WWD.  Subscribe Today.

Figures have been calculated at average exchange rates for the six-month period.

Burberry said Wednesday that, at constant exchange rates, revenues in the six months to Sept. 30 would have shown a decline of 5 percent, due to a 15 percent decline in wholesale sales, which was in-line with the company’s previous guidance.

The decline in wholesale revenues was due to customers worldwide readjusting their inventory levels, the company said. Burberry, meanwhile, terminated the Thomas Burberry collection and converted the company’s Middle Eastern business from wholesale to retail.

Chief executive officer Angela Ahrendts called the first-half revenue performance “solid,” highlighted by “good” nonapparel growth. “In this uncertain environment, the team at Burberry remains focused on executing to capitalize on all available opportunities,” she said.

In the second quarter, revenue rose 4.6 percent to 343 million pounds, or $562.5 million, from 328 million pounds, or $537.9 million. Figures have been calculated at average exchange rates for the three-month period to Sept. 30.

In the six-month period, all geographic areas, with the exception of Spain, where Burberry has been restructuring its business, showed positive growth, with the Asia-Pacific region rising 15 percent and Europe growing 14 percent. Sales in the Americas rose 7 percent in the period.

Stacey Cartwright, executive vice president and chief financial officer, said there was still lots of room for penetration in the U.S. and Canada. In the current half, Burberry plans to open 15 mainline stores, skewed towards the Americas and Asia.

Over the next few weeks, the first Burberry London and Burberry Brit stand-alone stores will open on Madison Avenue in New York. Cartwright said there was ample room in the U.S. for stand-alone stores and shop-in-shops for the London and Brit lines.

Retail revenue, which accounted for more than 50 percent of sales in the period, rose 27 percent to 311 million pounds, or $497.6 million, from 245 million pounds, or $392 million. Burberry said the U.K. and South Korea were the best-performing markets, with spending boosted by favorable currency movements.

Wholesale sales in the six months fell 15 percent to 216 million pounds, or $345.6 million, from 254 million pounds, or $406.4 million. In the second half, Burberry said it expects wholesale revenue to be down 15 percent at constant currency, once again due to a “cautious buy” from clients who continue to lower their inventory levels. “U.S. wholesale shows relative strength in the second half,” the company said.