LONDON — Burberry Group plc has begun the fiscal year on a high note with a 24 percent spike in sales and growth across all categories and regions.
The company said in a statement Wednesday that first-quarter sales rose to 167.5 million pounds, or $335 million, from 135.4 million pounds, or $270.8 million, in the year-ago period. All figures have been converted from the pound at current exchange.
"The year is off to a good start," said chief executive officer Angela Ahrendts, adding that Burberry's aggressive retail push was helping to drive wholesale sales, as well. "Results for the quarter are consistent with our expectations for the full financial year."
Chief financial officer Stacey Cartwright told WWD that the quarter was Burberry's best in at least three years. She added that the company was "paddling like crazy" to keep up with demand, and putting enormous pressure on the back end of the business to get the merchandise onto the shelves.
Burberry reported only sales figures on Wednesday. The company plans to release a trading update on Oct. 16, and full interim results on Nov. 14.
In the three months ending June 30, retail sales gained 18 percent, to 97 million pounds, or $194 million, from 82 million pounds, or $164 million, in the year-ago period, and accounted for 58 percent of revenue.
Ahrendts has been pushing Burberry to behave like a specialty luxury retailer, offering a steady stream of new products, more frequent deliveries and a more unified brand image. Those efforts have clearly trickled down to the company's wholesale business.
In the three-month period, wholesale sales increased 47 percent, to 55.3 million pounds, or $110.6 million, from 37.7 million pounds, or $75.4 million, a year ago. Wholesale sales accounted for 33 percent of revenue in the period.
The statement said the gain in wholesale revenue reflected the acceleration of merchandise shipments ahead of second-quarter requirements, an increased number of market weeks during the year and steady replenishment of merchandise.
The company is still expecting a mid-teens percentage increase in first-half wholesale sales revenue. Licensing was the only division in which sales slowed, decreasing 3 percent, to 15.2 million pounds, or $30.4 million, from 15.6 million pounds, or $31.2 million.Although eyewear and other products produced "solid gains," the company said, exchange rate differences — especially in Japan — put a dent in revenue growth for the quarter.
Cartwright said Japan accounts for some 60 to 70 percent of Burberry's licensing revenue, and although fragrance, eyewear and watches continue to perform strongly, they account for a smaller part of the overall licensing business.
"Each year, the exchange rate in Japan takes about 6.5 million pounds [or $13 million] off our revenue results and EBIT," she said.
Burberry said it expected "broadly flat" underlying licensing revenue for the full financial year.
On an operational level, Burberry also confirmed that it had sold its Haymarket headquarters near Piccadilly, and would bank a pretax gain of about 15 million pounds, or $30 million, associated with the transaction in the current fiscal year. The company will move into new headquarters on Horseferry Road in Westminster in fall 2008. The space will unite under one roof all the Burberry divisions, which are scattered now in five buildings.
The 1930s-era building had been occupied by the British government. Burberry plans to overhaul the interior and install glass walls and a bright, central atrium.
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