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Burberry delivers 30% increase in revenue in Q3
18 Jan '11
5 min read
Wholesale
Excluding China, wholesale revenue grew by 35% at constant exchange rates, benefiting from a re-phasing of deliveries into the third quarter from the fourth quarter compared to last year. Earlier deliveries were driven by monthly flow of product and strong demand from end consumers. Wholesale revenue including China increased by 15% at constant and reported exchange rates, as China transferred to retail.
Reflecting improved consumer demand, Burberry now expects a high teens percentage increase in second half wholesale revenue at constant currency excluding China (previously up around 10%). This revised guidance represents a revenue increase of over £10m, evenly split between the Americas, Asia Pacific and Europe. Improved replenishment capabilities enabled Burberry to respond effectively to strong in-season orders. The high teens expected growth also benefits by a low single-digit percentage from the first sales of the global collection in Spain.
For the second half, wholesale revenue including China is expected to increase by a mid single-digit percentage at constant currency (2009: £189m).
Licensing
As expected, total licensing revenue in the third quarter decreased by 7% on an underlying basis (down 11% at reported FX). Growth in the global product licences was offset by the impact of the planned termination of licences in menswear and Japanese non-apparel.
For the full year, Burberry still expects underlying licensing revenue to decline by a mid single-digit percentage. The yen hedge rate for the full year 2010/11 will give only a marginal benefit to reported numbers compared to 2009/10, with the exchange benefit already reported in the first half expected to reverse partly in the second half. In December 2010, Burberry and Interparfums extended by one year certain terms of their fragrance licence.
Spain restructuring
As announced in February 2010, Burberry is restructuring its Spanish operations. The global collection has been introduced from Spring/Summer 2011, with the final local collection being Autumn/Winter 2010.
In the current financial year, Burberry is disclosing 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 and adjusted profit before tax.
In FY 2011/12, the sales of the global collection will be reported in continuing operations – in retail, wholesale and Europe as appropriate. As noted above, wholesale revenue for the six months to 31 March 2011 will include a small contribution from the first sales of the global collection in Spain.
Excluding China, wholesale revenue grew by 35% at constant exchange rates, benefiting from a re-phasing of deliveries into the third quarter from the fourth quarter compared to last year. Earlier deliveries were driven by monthly flow of product and strong demand from end consumers. Wholesale revenue including China increased by 15% at constant and reported exchange rates, as China transferred to retail.
Reflecting improved consumer demand, Burberry now expects a high teens percentage increase in second half wholesale revenue at constant currency excluding China (previously up around 10%). This revised guidance represents a revenue increase of over £10m, evenly split between the Americas, Asia Pacific and Europe. Improved replenishment capabilities enabled Burberry to respond effectively to strong in-season orders. The high teens expected growth also benefits by a low single-digit percentage from the first sales of the global collection in Spain.
For the second half, wholesale revenue including China is expected to increase by a mid single-digit percentage at constant currency (2009: £189m).
Licensing
As expected, total licensing revenue in the third quarter decreased by 7% on an underlying basis (down 11% at reported FX). Growth in the global product licences was offset by the impact of the planned termination of licences in menswear and Japanese non-apparel.
For the full year, Burberry still expects underlying licensing revenue to decline by a mid single-digit percentage. The yen hedge rate for the full year 2010/11 will give only a marginal benefit to reported numbers compared to 2009/10, with the exchange benefit already reported in the first half expected to reverse partly in the second half. In December 2010, Burberry and Interparfums extended by one year certain terms of their fragrance licence.
Spain restructuring
As announced in February 2010, Burberry is restructuring its Spanish operations. The global collection has been introduced from Spring/Summer 2011, with the final local collection being Autumn/Winter 2010.
In the current financial year, Burberry is disclosing 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 and adjusted profit before tax.
In FY 2011/12, the sales of the global collection will be reported in continuing operations – in retail, wholesale and Europe as appropriate. As noted above, wholesale revenue for the six months to 31 March 2011 will include a small contribution from the first sales of the global collection in Spain.
Burberry Group plc
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