11th Jan 2006 07:01
Burberry Group PLC11 January 2006 Burberry Group plc Third Quarter 2005/06 Trading Update 11 January 2006. Burberry Group plc reports on trading for the third quarterended 31 December 2005. Financial Highlights • Retail sales increased 11% on an underlying* basis driven by new and existing stores • Wholesale revenues decreased 21% underlying, primarily reflecting shipment timing differences relative to the comparative period - Burberry anticipates a mid-to-high single digit underlying decline in wholesale sales for the second half • Licensing revenues increased 3% underlying • Total revenues increased 1% on an underlying basis, up 5% reported Third Quarter Nine Months ---------------------- ---------------------- Reported % change Reported % change ----------------- ---------------------- ----------------- ----------------------£ million 2005/06 2004/05 Reported Underlying* 2005/06 2004/05 Reported Underlying* ------- ------- -------- ----------- ------- ------- -------- ----------- Retail 115 95 21 11 242 206 18 9Wholesale 36 47 (25) (21) 229 245 (7) (3)Licence 18 18 0 3 58 57 1 3 ------ ------- ------- ------- ------ ------- ------- -------Total 168 161 5 1 529 509 4 3 * Underlying figures exclude the financial effect of Burberry's Taiwan-relatedbusiness and the portion of its business in Spain affected by the retailconversion in both reporting periods. In addition, underlying figures arecalculated at the same exchange rates used in the 2004/05 year's reportedresults for the period. Burberry completed the acquisition of the operations andassets of its distributors in Taiwan in August 2005 (the "Taiwan Acquisition"). Commenting on the trading results, Rose Marie Bravo, Chief Executive, stated,"In this retail dominated quarter, we were pleased with the results for theall-important holiday period. The business was led by our core outerwear andreinvigorated classics. At the same time, the favourable initial response toearly spring deliveries across all categories provides a good start toBurberry's 150th year." Total revenues Total revenues in the third quarter ended 31 December 2005 increased 1% on anunderlying basis (i.e. excluding (i) the financial effect of the TaiwanAcquisition, (ii) the portion of Burberry's business in Spain affected by theretail conversion and (iii) exchange rate differences). Total reported revenuesincreased 5%. The Taiwan Acquisition and Spain retail conversion shift salesfrom Burberry's wholesale channel to its retail channel. In determiningunderlying performance, the financial effect of these affected businesses areexcluded from both reporting periods. Retail Retail sales accounted for approximately 68% of total revenues in the period. Retail sales in the third quarter increased 11% underlying, 21% reported, drivenby contributions from new and existing stores. The acquisition of 12 retaillocations in Taiwan during August 2005 also contributed approximately fivepercentage points of the reported gain. During the quarter, Burberry openedstores in San Diego (California) and Palm Beach Gardens (Florida), twoconcessions and three outlet stores. On a year on year basis, average sellingspace increased approximately 9% underlying in the quarter. Retail sales growth varied by region. In the US market, solid gains were drivenby contributions from new and existing stores. In Europe, the combination of newstores and increases at existing stores generally produced strong gains inContinental markets. The UK market improved marginally relative to recenttrends. In Asia, sales in Korea firmed relative to recent periods, producing amodest increase in this market for the quarter. Hong Kong continued toexperience vigorous growth, driving an underlying gain across South Asiamarkets. Burberry plans to open one store and an outlet in Florida during the fourthquarter. Originally scheduled to open in the third quarter, these stores wereaffected by hurricane-related construction delays. The Group expects to addapproximately 9% average retail selling area for the second half and 9% for thefinancial year (excluding the impact of the Taiwan Acquisition and Spain retailconversion). Wholesale Wholesale sales accounted for approximately 21% of total revenues in the period. In the quarter, total wholesale sales decreased 21% underlying, 25% reported.The decline in underlying sales primarily reflected variances in the timing ofcustomer shipments relative to the comparative period. Wholesale sales were alsoaffected by soft demand in Spain and fewer reorders in certain other markets.The third quarter of each financial year is a small wholesale quarter with thelarge majority of spring/summer merchandise shipments concentrated in the fourthquarter. For the second half of 2005/06, Burberry anticipates a mid-to-high single digitdecline in underlying wholesale sales. In addition, as previously stated, theretail conversion in Spain and the Taiwan Acquisition will also reduce reportedwholesale sales in the second half relative to the previous year. In conjunction with local partners, the Group opened three franchise stores inthe quarter. In November, Burberry opened its first store in India's emergingluxury market, in Mumbai. During the period, the Group opened a store in Athensand a third store was added in Dubai. Licensing Licensing revenues in the quarter increased 3% on an underlying basis, 0%reported. In Japan, a modest increase in licensing revenue largely reflectedroyalty rate increases as Burberry continues its initiatives to enhance brandpositioning in this market. Global product licences generally performed in linewith recent trends, including preparation for a major fragrance launch inFebruary, transition to a new eyewear licence and continued strength in thewatch category. Burberry will provide a second half trading update on 12 April. Enquiries: Burberry 020 7968 0577Stacey Cartwright CFOMatt McEvoy Strategy and IRJohn Scaramuzza Strategy and IR Brunswick 020 7404 5959Susan 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 shares. Pastperformance is not a guide to future performance and persons needing adviceshould consult an independent financial adviser. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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