LONDON — Burberry’s chief executive officer Rose Marie Bravo, the driving force behind the renaissance at the British luxury label, agreed to extend her contract another year to July 2006 as the company reported that first-quarter sales climbed 6 percent to $194 million (103.7 million pounds) from $177 million (97.4 million pounds).
“I love what I’m doing,” Bravo told WWD. “And I’m very stimulated by my team — they are like a family to me. And there is so much more to do. You name it, we can do better. We can have higher standards.”
Bravo stepped in as ceo in 1997, when the firm was known only for its traditional trenchcoats and check pattern, and turned it into a major global luxury brand. She will be able to renew her contract on an annual basis, a Burberry spokeswoman said.
“I think it’s a great relief to the markets that she’s staying,” said Melanie Flouquet, equities analyst at J.P. Morgan in London. “People were a bit nervous that she was going to leave. She is so closely associated with the brand.”
Rhys Williams, equities analyst at Seymour Pierce, agreed: “It’s positive news. Under her reign…the group has been turned into a global luxury brand.”
“The board is delighted that Rose Marie has extended her contract,” said John Peace, chairman of Burberry, in a statement. “Under her leadership, Burberry has been transformed into an international luxury brand, and the business has achieved great success with respect to revenues and profitability.”
Bravo scored a 100 percent bonus for her performance in the 2003-04 fiscal year, when profits soared 75.3 percent to $171.1 million (91.5 million pounds), thanks in part to huge gains. Turnover rose 13.8 percent to $1.26 billion (675.8 million pounds).
In exchange for hitting Burberry’s internal sales and profit targets, Bravo received $1,568,000 — the equivalent of her base salary — as a reward, according to the company’s latest annual report, issued last month.
Shareholders will be asked to approve that bonus and other details regarding the company during the annual general shareholders’ meeting, scheduled for today in London.
Meanwhile, Burberry said in its statement Monday that first-quarter sales rose 14 percent on a constant-currency basis to $206.8 million (110.6 million pounds).
European companies often report results in constant-currency terms, as a way of showing how high growth would have been without the negative impact of fluctuating foreign exchange rates. The Burberry statement did not release any profit figures for the period.
“The financial year is off to a good start,” said Bravo. “In this quarter, we achieved strong sell-through of remaining spring-summer merchandise, and experienced an encouraging initial consumer response to our autumn-winter collections.”
In the three months ended June 30, retail sales, which accounted for 54 percent of total revenue in the quarter, rose 7 percent to $104 million (55.6 million pounds) from $97.4 million (52.1 million pounds).
On a constant-currency basis, sales rose 15 percent to $112 million (59.9 million pounds), despite difficult comparisons with the corresponding period last year.
Newly opened stores and a renewed vigor from markets such as continental Europe, Hong Kong and Southeast Asia also drove sales in the quarter. Burberry is on track to open seven new stores and concessions in the current fiscal year, adding approximately 8 percent net retail selling area.
Burberry said that growth in the U.S. slowed. This was expected after the company achieved 20 percent growth in that market a year ago. Sales in Korea were still suffering from the effects of a volatile macroenvironment.
“The negative surprise came from the U.S., where sales growth moderated to a low-single-digit,” said J.P. Morgan’s Flouquet. “We understand that this was mainly due to the tough comps set by June 2003, when sales were very strong, and by relatively significant markdowns.”
Rupert Trotter, an equities analyst with Isis Asset Management in London, said: “The company had very tough comparisons in the U.S. this quarter, but it’s clear that it’s building a very strong business in that market. Burberry is clearly confident, too, about its wholesale business as it refines its department store portfolio.”
Wholesale sales increased 5 percent to $69.2 million (37 million pounds) from $65.6 million (35.1 million pounds). They rose 10 percent on a constant-currency basis to $72.6 million (38.8 million pounds). The company added that it is expecting 10 percent underlying wholesale sales growth for the fall 2004 season. The majority of fall product ships during the second quarter.
Total licensing revenues in the quarter increased by 9 percent to $20.8 million (11.1 million pounds) from $19.1 million (10.2 million pounds) and rose by 17 percent to $22.3 million (11.9 million pounds) on a constant-currency basis.
Volume in the Japanese market was broadly in line with the previous year, while global product licensees posted strong sales gains.