15th Jan 2008 07:01
Burberry Group PLC15 January 2008 15 January 2008 Burberry Group plc Third Quarter Trading Update and Interim Management Statement Burberry Group plc, the global luxury company, today reports on trading for thethree months to 31 December 2007. Third quarter highlights (on an underlying basis*) • Total revenue increased by 26% • Retail revenue up 14%, with comparable store sales growth of 6% • Wholesale revenue increased by 74% o Now expect over 20% growth for the second half (up from mid-teens growth previously) As anticipated, the all-important third quarter was an intense period ofactivity for Burberry, with our new IT systems in warehousing and Europeanretail operational for the first time. Volume growth overall was high, driven bythe strength of our products, and we continued to increase infrastructure coststo support this strong growth. However, retail sales did come in modestly behindour plan, with proportionally more inventory sold during our usual sale period. Commenting on this performance, Angela Ahrendts, Chief Executive Officer, said: "In the third quarter, Burberry delivered 26% sales growth, with soliddouble-digit growth in all channels and regions, notwithstanding economic andinternal infrastructure challenges. This performance reflects the continuedappeal of our new product and marketing strategies globally, and particularly inour high growth, under-penetrated regions including the United States, China andEmerging Markets." There will be conference calls to discuss this update today at 9am and 3pm (UKtime). The conference calls can be accessed live on the Burberry website (www.burberryplc.com), with replays of both calls available later today. Burberry will release its Second Half Trading Update for the six months to 31March 2008 on 15 April 2008. It will announce its preliminary results for theyear to 31 March 2008 on 28 May 2008. * Underlying change is calculated at constant exchange rates.Certain financial data within this announcement has been rounded. Revenue by origin of business Three months to 31 December % change£ million 2007 2006 reported------------------ --------- --------- ---------Europe (excluding Spain) 83 59 41Spain 26 23 16North America 85 71 19Asia Pacific 60 53 11 --------- --------- ---------Total 254 206 23------------------ --------- --------- --------- Retail and wholesale revenue by destination Three months to 31 December % change£ million 2007 2006 reported underlying------------------ --------- --------- --------- ---------Europe (excluding Spain) 67 47 43 41Spain 26 22 16 10North America 85 72 19 26Asia Pacific 49 42 15 20Other 8 4 90 90 --------- --------- --------- ---------Total 235 187 26 28------------------ --------- --------- --------- ---------Comments in this announcement refer to revenue by destination which betterreflects the regional demand for Burberry products. Revenue by channel of distribution Three months to 31 December % change£ million 2007 2006 reported underlying------------------ --------- --------- --------- ---------Retail 161 144 12 14Wholesale 74 43 71 74Licensing 19 19 (1) 7 --------- --------- --------- ---------Total 254 206 23 26------------------ --------- --------- --------- --------- Total revenueTotal revenue in the third quarter increased by 26% on an underlying basis (23%reported). There was solid double-digit growth in both retail and wholesale;with double-digit comparable store sales growth in major markets including theUnited States, Hong Kong and Emerging Markets. Luxury handbags, outerwear, shoesand other accessories, including scarves, were particularly strong. RetailRetail sales, which accounted for over 60% of total revenue in the period,increased by 14% on an underlying basis (12% reported), modestly behind ourplan. Comparable store sales grew by 6% in the three months to 31 December 2007, withproportionally more inventory sold during our usual sale period. In the UnitedStates, comparable store sales continued to show double-digit growth for thethree month period, with better performances in major cities. Europe (excludingSpain) showed positive comparable store sales growth, with Italy again the bestperforming market. However, Spain declined year-on-year in the third quarter,reflecting a more difficult retail environment throughout the period. Hong Kongremained the strongest market within Asia. During the third quarter, we opened six mainline stores, including Florence, anadditional store in Hong Kong and our fifth icon trial in the Beverly Center,Los Angeles. There was an 11% increase in average selling space year-on-year inthe third quarter, with 12% expected for the second half as a whole. WholesaleIn what is a small quarter for wholesale, revenue increased by 74% on anunderlying basis (71% reported). This was driven by more replenishment and bynew and earlier deliveries, including October gift and Spring accessoriescollections. For the second half of the year, Burberry now expects wholesale revenue toincrease by over 20% on an underlying basis (up from mid-teens growthpreviously). This reflects the successful execution of our new productstrategies, leading to outperformance (and thus high sell-through rates) of ourmerchandise in our wholesale customers' stores. We also have growing confidencein our ability to deliver on a more timely basis following the implementation inSeptember 2007 of our new IT system (SAP) for shipping. In the second half, wholesale revenue in Spain is expected to show furtherweakness, while the rest of Europe and North America will deliver increases ofover 40%. This strong growth will continue to incur some additional warehousingand distribution costs. Emerging Markets again outperformed. During the third quarter, we opened twostores in conjunction with local franchisees, including one in St Petersburg,Russia. About six store openings are planned for the fourth quarter and about 15in the next financial year. LicensingTotal licensing revenue in the third quarter increased by 7% on an underlyingbasis (down 1% reported), with growth from both apparel and non-apparel licencesin Japan. This performance, which benefited from phasing differences relative tolast year, is consistent with our expectation for the full financial year ofbroadly flat licensing revenue on an underlying basis. We continue to expect theweakness of the yen to reduce reported revenue and profit by about £6m in thefull year. A new fragrance, Burberry The Beat, will be launched during the fourth quarterby our partner, Inter Parfums, which will fund a supporting global advertisingcampaign. Financial conditionExcept for the trading activities described above, there has been no significantchange to the financial condition of the company. Enquiries Burberry 020 7968 5919Stacey Cartwright Chief Financial OfficerFay Dodds Director of Investor Relations Brunswick 020 7404 5959David YellandRobert GardenerClare Barclay The financial information contained in this Trading Update has not been audited.Certain statements made in this Trading Update are forward-looking statements.Such statements are based on current expectations and are subject to a number ofrisks and uncertainties that could cause actual results to differ materiallyfrom any expected future results in forward-looking statements. This announcement does not constitute an invitation to underwrite, subscribe foror otherwise acquire or dispose of any Burberry Group plc shares. Pastperformance is not a guide to future performance and persons needing adviceshould consult an independent financial adviser. Notes to Editors • Burberry is a global luxury brand with a distinctive British heritage. • Burberry designs and sources apparel and accessories, distributing through a diversified network of retail, wholesale and licensing channels worldwide. • Burberry has five strategic themes to underpin its growth: leverage the franchise; intensify non-apparel development; accelerate retail-led growth; invest in under-penetrated markets; pursue operational excellence. • At 31 December 2007, Burberry had 94 retail stores globally, with 208 concessions, 35 outlets and 66 stores operated under franchise. • Burberry was founded in 1856 and is listed on the London Stock Exchange (BRBY.L). This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Burberry