LONDON — First-half sales at Burberry Group plc rose 2.3 percent to 355 million pounds, or $621.3 million, from 347 million pounds, or $607.3 million, and the company indicated the second half would be challenging.
In the period ended Sept. 30, retail sales showed the highest growth rate, rising 11.7 percent to 124 million pounds, or $217 million, from 111 million pounds, or $194.3 million, the company said in a statement Wednesday.
Burberry's 12 newly acquired retail stores in Taiwan and store openings and refurbishments worldwide contributed to the increase. Average selling space increased by approximately 8 percent in the half.
Geographically, the U.S. delivered growth thanks to new and refurbished stores in San Antonio; Boston; Denver; Philadelphia; White Plains, N.Y., and Washington.
The Hong Kong and Southeast Asian markets also reported strong gains at retail. In Continental Europe, growth came chiefly from new and refurbished stores in places such as Zurich, Frankfurt and Munich. However, the U.K. market remains soft.
In the statement, Burberry chief executive Rose Marie Bravo said the Prorsum collection has been the highlight of the autumn 2005 collection at retail. As reported, Burberry on Tuesday appointed Angela Ahrendts, currently an executive vice president at Liz Claiborne Inc., to succeed Bravo when she steps down as ceo in July.
Wholesale sales, which account for more than 50 percent of Burberry's total revenue, dipped 3 percent to 191 million pounds, or $334.3 million, from 197 million pounds, or $344.8 million, due partly to the acquisition of the Taiwan stores.
In the U.S., Burberry added that "caution" on the part of certain retailers added to the decline in wholesale sales. Burberry also has been adjusting its wholesale/retail balance in the U.S., which contributed to the overall decline in sales.
Sales in Spain and the U.K., two of Burberry's most important European markets, were also soft in the half. However, emerging markets, where Burberry has begun opening franchises, all delivered growth. The company opened franchised stores in Istanbul, Warsaw, São Paulo, Brazil, and Jeddah and Riyadh, Saudi Arabia.
Meanwhile, total licensing revenue rose 2.6 percent in the period to 40 million pounds, or $70 million, from 39 million pounds, or $68.3 million. Royalties from Japan were flat due to the cancellation and restructuring of licenses there.The company said fragrance-related royalty growth slowed in the half, reflecting strong comparatives resulting from the Burberry Brit for men launch the previous year and the one-year anniversary of Burberry's royalty rate increase.
In the current half, the company will forge ahead with store openings, with total retail space increasing 9 percent for the entire financial year, not including the Taiwan stores.
With regard to wholesale sales, the company said it expected a "moderate" underlying decline in sales for the second half of the year. The decline will be due to a soft U.K. market and less demand from Spain as it shifts portions of its women's business from wholesale to retail channels there.
Licensing growth in the current period will be "broadly consistent" with the first half. Burberry will continue to hone its brand positioning in the Japanese market and restrain volume growth there, the statement said.
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