The global buy, better planning and inventory investment enabled the acquired Chinese stores to deliver comparable sales growth of around 30% again in the quarter. These sales are not included in Burberry's 15% comparable growth in the period. These acquired stores are now expected to add about 11% to average selling space in the first half of the year (13% in Q1).
Approval has also been received for a joint operation in the Kingdom of Saudi Arabia. Burberry has a 60% stake in this new venture which operates five stores. These stores transferred from franchise (wholesale) to directly-operated (retail) during June 2011. Average retail selling space for Burberry is now planned to increase by around 15% in the year to 31 March 2012 (previously 12-13%).
Wholesale Excluding China, wholesale revenue in the first quarter increased by 19% on an underlying basis (up 16% at reported FX). Including China, wholesale revenue grew by 11% underlying (up 9% at reported FX).
With higher than planned in-season orders received to date, Burberry now projects wholesale revenue excluding China to increase by a high teens percentage at constant exchange rates in the first half (previously mid teens growth). This includes strong performances in key product strategies including men's tailoring, men's accessories, shoes and childrenswear. Good progress is expected from the Americas, Travel Retail and Emerging Markets, offsetting further rationalisation of small specialty stores. Sales of the global collection in Spain are expected to contribute a low single-digit percentage to this growth as previously guided.
Including China, wholesale revenue in the first half is projected to increase by a mid to high single-digit percentage at constant exchange rates (2010: £226m). Licensing
Total licensing revenue in the first quarter increased by 6% on an underlying basis (up 11% at reported FX). The step-up in royalty income from the Japanese apparel licence and good growth from the global product licences more than offset the planned impact of terminating legacy Japanese non-apparel licences. A new fragrance will again be launched during the second quarter.
In the year to 31 March 2012, Burberry continues to expect licensing revenue at constant exchange rates to increase by a mid single-digit percentage. This assumes all Japanese apparel and non-apparel royalty income is received at contractual minimum levels as originally planned. Licensing revenue at reported FX is now expected to increase by around 10% (previously a high single-digit percentage), reflecting recent movements in the euro/sterling exchange rate.
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