Outerwear further increased its penetration at Burberry

13 Jul '10

4 min read

Within the 8% increase in average retail selling space in the first quarter, Burberry opened eight mainline stores, including two in India, its first store in Brazil and a second standalone store in Ginza, Tokyo for its non-apparel joint venture. For the year as a whole and excluding the Spanish business affected by the restructuring, Burberry plans an increase of around 10% in average retail selling space, weighted towards the second half.

Wholesale
In what is the smallest quarter of the year for wholesale, revenue in the period increased by 46% on an underlying basis (up 51% reported). Improved monthly flow of goods and supply chain efficiencies enabled a re-phasing of deliveries into the first quarter compared to last year. China, which is run under franchise, continued to perform strongly in the quarter.

In the six months to 30 September 2010, Burberry continues to project wholesale revenue at constant exchange rates to increase by a high teens percentage excluding Spain. Significant growth is expected in all regions except Europe, where continued rationalisation of small specialty accounts is in progress.

Licensing
Total licensing revenue in the first quarter increased by 14% on an underlying basis, benefiting from timing differences relating to the Japanese apparel licence and a strong performance from fragrance, led by Burberry Sport. Reported licensing revenue increased by 36%, largely reflecting a favourable yen hedge rate which will benefit the first half.

Despite the strong first quarter, Burberry continues to expect licensing revenue at constant exchange rates to decline by between 5-10% in the year to March 2011. Growth from the global product licences will be offset by a broadly flat performance from the Japanese apparel licence and the non-renewal of the Japanese leather goods and the final menswear licences. The yen hedge rate for the full year 2010/11 will give only a marginal benefit to reported numbers compared to 2009/10.

Spain restructuring
As announced in February 2010, Burberry is restructuring its Spanish operations. The global collection will be introduced from Spring/Summer 2011 across all channels. The local collection will cease after Autumn/Winter 2010.

In FY 2010/11, Burberry expects to disclose the results of this Spanish business separately to aid investors' understanding of the ongoing global business. These Spanish losses will be excluded from adjusted operating profit.

Burberry Group plc

More Burberry Group Plc News... More Apparel/Garments News - United Kingdom...