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Burberry generates 30% revenue growth in H1
13 Oct '11
5 min read
Comparable store sales growth in China continued at around 30%, helped by the ongoing implementation of global processes and retail disciplines. Sales in the acquired stores were not included in Burberry's 16% comparable growth until 1 September 2011, the anniversary of the acquisition.
In mainline stores globally, the consistent execution of key strategies again drove revenue growth and average selling prices. Core outerwear and large leather goods contributed half of the growth, while the increased focus on Burberry London drove outperformance. Replenishment products increased as a percentage of sales in every major category.
Burberry opened a net eight mainline stores in the first half, including two in India and two childrenswear stores in the Middle East and Hong Kong. The brand's presence was strengthened in European department store concessions and the first concession in Canada was opened. Average retail selling space increased by 14% in the first half, with the acquired Chinese stores adding a further 11%.
Wholesale
Wholesale revenue excluding China grew by 20% on an underlying basis in the first half, slightly ahead of guidance. There was particular strength in Americas, Emerging Markets and Travel Retail. Key merchandising strategies including shoes, childrenswear, men's tailoring and men's accessories performed strongly.
In June 2011, five stores in Saudi Arabia were converted from franchise to retail through a joint operation. Burberry finished the half with 52 franchise stores, mainly in Emerging Markets, with about five franchise openings planned for the second half.
Total wholesale revenue grew by 9% underlying in the first half (up 10% at reported FX).
Licensing
Licensing revenue increased by 4% on an underlying basis in the first half (up 11% at reported FX), consistent with full year guidance. The step-up in royalty income from the Japanese apparel licence and good growth from the global fragrance, eyewear and timepiece licences more than offset the impact of the planned termination of certain Japanese non-apparel and the final regional menswear licences.
Burberry Body, the new fragrance for women, was launched in-store and online during September 2011, supported by the innovative use of both social media and outdoor advertising, further extending reach and awareness of the Burberry brand.
Outlook
Retail: For the second half of FY 2011/12, average retail selling space is planned to increase by about 15%. Burberry expects to open a net eight to ten mainline stores, including in China, Latin America and a flagship in Paris.
Wholesale: In the second half, the planned shift from wholesale to retail continues, with the conversion of the five Saudi Arabia stores and menswear in Spain moving to a concession model. Further rationalisation of the brand's distribution in the US and Europe continues. As aresult, against a period of tougher comparatives, Burberry expects wholesale revenue to increase by a mid single-digit percentage at constant exchange rates in the second half.
Licensing: For the full year, Burberry continues to expect licensing revenue at constant exchange rates to increase by a mid single-digit percentage. Licensing revenue at reported FX is still expected to increase by around 10%.
In mainline stores globally, the consistent execution of key strategies again drove revenue growth and average selling prices. Core outerwear and large leather goods contributed half of the growth, while the increased focus on Burberry London drove outperformance. Replenishment products increased as a percentage of sales in every major category.
Burberry opened a net eight mainline stores in the first half, including two in India and two childrenswear stores in the Middle East and Hong Kong. The brand's presence was strengthened in European department store concessions and the first concession in Canada was opened. Average retail selling space increased by 14% in the first half, with the acquired Chinese stores adding a further 11%.
Wholesale
Wholesale revenue excluding China grew by 20% on an underlying basis in the first half, slightly ahead of guidance. There was particular strength in Americas, Emerging Markets and Travel Retail. Key merchandising strategies including shoes, childrenswear, men's tailoring and men's accessories performed strongly.
In June 2011, five stores in Saudi Arabia were converted from franchise to retail through a joint operation. Burberry finished the half with 52 franchise stores, mainly in Emerging Markets, with about five franchise openings planned for the second half.
Total wholesale revenue grew by 9% underlying in the first half (up 10% at reported FX).
Licensing
Licensing revenue increased by 4% on an underlying basis in the first half (up 11% at reported FX), consistent with full year guidance. The step-up in royalty income from the Japanese apparel licence and good growth from the global fragrance, eyewear and timepiece licences more than offset the impact of the planned termination of certain Japanese non-apparel and the final regional menswear licences.
Burberry Body, the new fragrance for women, was launched in-store and online during September 2011, supported by the innovative use of both social media and outdoor advertising, further extending reach and awareness of the Burberry brand.
Outlook
Retail: For the second half of FY 2011/12, average retail selling space is planned to increase by about 15%. Burberry expects to open a net eight to ten mainline stores, including in China, Latin America and a flagship in Paris.
Wholesale: In the second half, the planned shift from wholesale to retail continues, with the conversion of the five Saudi Arabia stores and menswear in Spain moving to a concession model. Further rationalisation of the brand's distribution in the US and Europe continues. As aresult, against a period of tougher comparatives, Burberry expects wholesale revenue to increase by a mid single-digit percentage at constant exchange rates in the second half.
Licensing: For the full year, Burberry continues to expect licensing revenue at constant exchange rates to increase by a mid single-digit percentage. Licensing revenue at reported FX is still expected to increase by around 10%.
Burberry Group plc
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