13th Jul 2005 07:00
Burberry Group PLC13 July 2005 Burberry Group plc First Quarter Trading Update 13 July 2005. Burberry Group plc reports on trading for the first quarter ended30 June 2005. Highlights • Total revenue increased 9% on an underlying* basis • Retail sales rose 9% underlying driven primarily by new and refurbished stores • Wholesale revenues increased 5% underlying; excluding the effect of the Taiwan Acquisition, Burberry continues to anticipate first half wholesale sales broadly flat relative to the previous year • Licensing revenue increased 26% underlying; Burberry continues to anticipate moderate licensing revenue growth for the year • Entered into agreements to acquire Taiwan distributors Quarter to 30 June ----------------------- 2005 2004 % change ---------------- ----------------£ million Reported Underlying* Reported Reported Underlying* -------- --------- -------- -------- --------- Retail 60.8 60.5 55.6 9 9Wholesale 38.7 38.8 37.0 5 5Licence 14.2 13.9 11.1 28 26 -------- --------- -------- -------- --------- Total 113.7 113.2 103.7 10 9 * Underlying figures are calculated at the same exchange rates used in theprevious year's quarterly reported results. Commenting on the trading results, Rose Marie Bravo, Chief Executive, stated,"Burberry has had a successful first quarter. We largely completed the seasonaltransition of our stores and are encouraged by the initial consumer response toautumn/winter merchandise. At the same time, Burberry continued to strengthenthe brand's presence in Asia by finalising terms for the acquisition of ourdistributors in Taiwan." Total revenue Total revenue in the first quarter increased 9% on an underlying basis (i.e. atconstant exchange rates), 10% reported, compared to the same period last year. Retail Retail sales in the quarter increased 9% underlying, 9% reported, driven bycontributions from newly opened and refurbished stores and marginal gains atexisting stores. Retail sales accounted for approximately 53% of total revenuein the period. During the quarter, Burberry opened four concessions in Spain andKorea and an outlet store. The Group also reopened several refurbished stores,including those in Boston, Denver, Philadelphia and Washington DC. Year on yearaverage retail selling space increased approximately 8% in the quarter. Burberryremains on schedule to increase net retail selling area by approximately 8% forthe financial year, excluding the impact of the Taiwan Acquisition. Retail sales performance varied by region. In the US, strong sales growth atfull price and outlet stores resulted from gains at existing stores, whichbenefited from end of season clearance activity, and selling space additions.Against strong comparatives, sales growth in Continental European markets wasdriven primarily by new stores and concessions. The UK market continued to besoft. In Asia, sales in Korea continued to be volatile as a result of thechallenging retail environment, which produced a small decline for the quarter.Led by existing stores, Hong Kong and Southeast Asian markets achieved stronggains in the period. Wholesale In the quarter, total wholesale sales increased 5% on an underlying basis, 5%reported. The majority of autumn/winter product shipments are concentrated inthe second quarter of each financial year. Excluding the impact of the TaiwanAcquisition, Burberry continues to anticipate first half wholesale sales broadlyflat relative to the previous year. The Taiwan Acquisition will result in amodest shift of sales from Burberry's wholesale channel to its retail channelfor the half and full financial year. In conjunction with local partners, the Group opened franchised stores in SaoPaolo (Brazil), Jeddah (Saudi Arabia) and Riyadh (Saudi Arabia) in the quarter. Licensing Total licensing revenues in the quarter increased 26% on an underlying basis,28% reported. In Japan, aggregate volumes declined as a result of Burberry'sprogramme to restrict selectively distribution of certain products, a softapparel market and licence transitions/cancellations. This decline was largelyoffset by increases in certain royalty rates. Licensing revenue growth alsoreflected increased royalties from Burberry's global product licensees. Thesegains were led by fragrance revenues, which benefited from an improved royaltystructure relative to the previous period. Burberry continues to anticipatemoderate licensing revenue growth for the full financial year. Taiwan Acquisition In June, Burberry entered into agreements to acquire the operations and assetsof its distributors in Taiwan (the "Taiwan Acquisition"). These operationsconsist of 12 retail stores and concessions located across Taiwan. Totalconsideration for the acquisition, including the value of a future contingentpayment, is expected to be approximately £9 million in cash. Following theinitial partial year of transition, the purchase is expected to contribute inthe order of £2 million of operating profit in financial year 2006/07. Thetransaction is scheduled to close in August 2005. Burberry will provide a first half trading update on 11 October and releaseinterim results for the six months to 30 September 2005 on 15 November. Enquiries: Burberry 020 7968 0577 Stacey Cartwright CFOMatt McEvoy Strategy and IRJohn Scaramuzza Strategy and IR Brunswick 020 7404 5959 Susan GilchristRobert GardenerLaura Cummings 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 or GUS plc shares.Past performance is not a guide to future performance and persons needing adviceshould consult an independent financial adviser. 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