Wholesale revenue grew by 15% on an underlying basis (up 16% at reported FX), benefiting from a re-phasing of deliveries into the third quarter from the fourth quarter in Europe and Emerging Markets in particular. This was driven by an improved supply chain performance and increased orders for the November and December monthly floorsets. In the US, a strong performance in key department store doors and new shop-in-shops was offset by the planned rationalisation of distribution in this market.
For the second half, Burberry continues to expect wholesale revenue to increase by a mid single-digit percentage at constant exchange rates, against a period of tougher comparatives. Growth in Asia Travel Retail and Emerging Markets will be partly offset by the impact of the shift from wholesale to retail in Saudi Arabia and Spain and further rationalisation of the brand's distribution in the US and Europe.
Licensing revenue in the third quarter increased by 12% on an underlying basis (up 19% at reported FX, largely reflecting a more favourable yen exchange rate year-on-year). Royalty income from Japan was broadly flat as the step-up in apparel income was largely offset by the planned termination of certain non-apparel licences. There was excellent growth in the quarter from the three global product licences - fragrance, eyewear and watches. Fragrance benefited from the successful Burberry Body launch, which further extended the reach and awareness of the Burberry brand globally.
For the full year, Burberry still expects licensing revenue to increase by a mid single-digit percentage at constant exchange rates and by around 10% at reported FX.
In December 2011, Burberry and Interparfums announced they are in discussions regarding the establishment of a new operating structure for the Burberry fragrance and beauty business. As part of this process, Burberry exercised its right to evaluate the purchase price for the unexpired term of the existing licence. Burberry has until 31 July 2012 to determine whether it wishes to buy out the unexpired portion of the licence or continue the existing licence which runs to 31 December 2017.
Burberry is a global luxury brand with a distinctive British heritage, core outerwear and large leather goods base and one of the most recognised icons in the world. Burberry designs and sources apparel and accessories, selling through a diversified network of retail, wholesale, licensing and digital channels worldwide.
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