LONDON — First-quarter revenues at Burberry Group plc got a boost from the strong euro, new store openings and sales of accessories and outerwear, rising 8.5 percent to 229 million pounds, or $478.9 million, from 211 million pounds, or $327.1 million, in the year-ago quarter.
Burberry chief executive officer Angela Ahrendts said in a trading update Wednesday Burberry had made a “solid start” to the year in a challenging environment. She added the company was “well-placed to deliver sustainable long-term growth.”
Retail sales in the three months ended June 30 rose 28.7 percent to 148 million pounds, or $229.4 million, from 115 million pounds, or $178.3 million, because of new store openings worldwide and to double-digit growth in Europe and Asia — especially the U.K. and Korea.
Dollar figures have been calculated at average exchange rates for the three-month period.
Stacey Cartwright, executive vice president and chief financial officer, said in an interview that Europeans had been spending in Burberry stores across London — from the Bond Street flagship to the new Westfield shopping mall to the airport shops — taking advantage of the strong euro.
Burberry also saw a spike in sales in Korea. Cartwright said Koreans are increasingly staying home because of the nation’s weak currency, the won, and buying their Burberry merchandise in local currency, which is more cost-effective.
The U.S. and Spain remain difficult, the company said. “Our own retail in the U.S. has been hit, but from what we’re hearing anecdotally, we are performing better than our peers and taking market share,” Cartwright said.
Comparable store sales in both the US and Spain showed “double-digit” decreases in the quarter. Burberry said that, worldwide, it plans to increase its average selling space 10 to 12 percent in the year as a whole.
Wholesale revenue in the quarter fell 21.3 percent to 63 million euros, or $97.7 million, from 80 million euros, or $124 million.
The wholesale decrease in the quarter was due to a combination of factors, including the closure of the Thomas Burberry line, the rationalization of small, specialty accounts in Europe, the conversion of Burberry Middle East from wholesale to retail, and clients readjusting their inventory levels.
Following this trend, Burberry is projecting a 25 percent fall in wholesale revenue, at constant exchange rates, in the six months to Sept. 30.
Cartwright said the reduced inventory levels were good in the long run. “It means the risk of end-of-season markdowns is significantly reduced.”
Overall, she said, consumers were going for investment pieces, such as bags, shoes and soft accessories to update their wardrobes. Outerwear, she said, remains the core of Burberry’s sales.
In a note on Wednesday, Thomas Chauvet of Citigroup Global Markets said Burberry’s retail figures were better than expected, thanks to a good response from the spring 2009 collection, especially in accessories and new product categories.
Citi had projected sales to be 144 million pounds, or $223.2 million, compared with Burberrys’s 148 million pounds, or $243 million. However, Burberry’s overall revenue came in under Citi’s forecast of 236 million pounds, or $365.8 million, because of smaller-than-expected wholesale growth.
Licensing revenue in the quarter rose 12.5 percent to 18 million pounds, or $27.9 million, from 16 million pounds, or $24.8 million, due to currency benefits and timing differences in royalty receipts, mainly in Japan.
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