LONDON — Burberry’s revenues soared 20 percent in the first half, but the company is preparing itself for a challenging third quarter.
Sales in the first six months to Sept. 30 rose to 539 million pounds, or $1.04 billion, from 449 million pounds, or $899.5 million, the previous year. All figures have been converted at average exchange rates for the respective periods.
Burberry chief executive officer Angela Ahrendts said Tuesday she expects trading conditions to remain “volatile and uncertain” for the crucial third quarter, the run-up to the Christmas season.
In addition, the company said wholesale revenues are expected to be broadly flat on an underlying basis in the second half, with licensing revenues in the full year slightly down.
Ahrendts said the company would continue to focus on its products and strategies to drive long-term growth. Stripping out the positive currency impact, Burberry’s underlying revenues rose 13 percent in the period.
The first-half results beat Citi analysts’ expectations by 3 percent, reflecting a stronger-than-expected wholesale performance. Retail figures were in line with Citi’s expectations, while licensing was worse than expected.
Burberry’s second-quarter revenues rose 16 percent to 328 million pounds, or $634.4 million, from 321 million pounds, or $643.1 million.
In the first half, retail revenues rose by 21 percent, driven by sales of outerwear and accessories, and by growth in all regions except for Spain.
Growth also came from a 13 percent increase in new store space, as well as an increase in same-store sales. Store openings included Bellevue, Wash.; Burlington, Mass., and Budapest.
The best-performing region in the six-month period was the U.S., followed by Europe and Asia.
Spain remains a difficult market because of low consumer confidence and a poor economic environment, Burberry said. In the first half, sales were down 20 percent, and the second half of the year will show no improvement. Spain is one of the company’s largest markets, along with the U.K., U.S. and Japan.
Meanwhile, wholesale revenues climbed by 23 percent, the company said, due to more on-time deliveries, thanks to an improving supply chain and growth in the U.S., Europe and emerging markets.
Sales in the U.S. and Europe grew by more than 20 percent, while sales in emerging markets grew by more than 50 percent, with particular strength in China, Russia, the Middle East and Eastern Europe. Licensing revenues were flat.
In the second half, selling space is expected to increase by 12 percent year-on-year. Although wholesale sales will grow in the U.S. and emerging markets, they are expected to decline in Spain, due to the economic climate and the ongoing closures of independent retailers there.
Meanwhile, licensing revenues are expected to be slightly down in the second half, reflecting “a modest softening” in demand in Japan and lower output of certain global licensed products.
The company will release full interim results, including profits, on Nov. 18.
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