15th Apr 2008 07:01
Burberry Group PLC15 April 2008 15 April 2008 Burberry Group plc Second Half Trading Update Burberry Group plc, the global luxury company, reports on trading for the sixmonths to 31 March 2008. Second half highlights (on an underlying basis*) • Total revenue increased by 18% • Retail revenue up 17%, with comparable store sales growth of 6% •Retail sales over 50% of revenue •Nine mainline stores and nearly 40 concessions opened €12% increase in selling space • Wholesale revenue increased by 25% •North America and Emerging Markets outperformed •Around 10% growth expected in first half of 2008/09 • Licensing revenue unchanged, as expected Commenting on this performance, Angela Ahrendts, Chief Executive Officer, said: "Burberry had a good finish to the year, against the background of anincreasingly challenging external environment. Looking forward, we are thrilledwith the momentum of our brand as our core luxury, retail and non-apparelstrategies continue to gain traction, while our seasoned management team focuseson improving the operational aspects of our business." There will be a conference call for investors and analysts to discuss thisupdate today at 9am (UK time). The conference call can be accessed live on theBurberry website (www.burberryplc.com), with a replay available later today. Burberry will release its preliminary results for the year to 31 March 2008 on28 May 2008. * Underlying change is calculated at constant exchange rates. Certain financial data within this announcement have been rounded. Revenue by origin of business Six months to 31 March % change£ million 2008 2007 reported------------------ --------- --------- ---------Europe* 194 143 35Spain 91 87 4North America 135 113 20Asia Pacific 126 115 10 --------- --------- ---------Total 546 458 19------------------ --------- --------- ---------* excluding Spain Retail and wholesale revenue by destination Six months to 31 March % change£ million 2008 2007 reported underlying------------------ --------- --------- --------- ---------Europe* 154 119 29 25Spain 86 77 12 1North America 137 115 19 24Asia Pacific 106 92 16 18Rest of World 18 10 87 87 --------- --------- --------- ---------Total 501 413 21 20------------------ --------- --------- --------- ---------* excluding Spain Revenue by channel of distribution Six months to 31 March % change£ million 2008 2007 reported underlying------------------ --------- --------- --------- ---------Retail- Q3 161 144 12 14- Q4 121 97 24 20 --------- --------- --------- ---------Six months to 31 March 282 241 17 17------------------ --------- --------- --------- ---------Wholesale- Q3 74 43 71 74- Q4 145 129 13 9 --------- --------- --------- ---------Six months to 31 March 219 172 28 25------------------ --------- --------- --------- ---------Licensing- Q3 19 19 (1) 7- Q4 26 26 1 (5) --------- --------- --------- ---------Six months to 31 March 45 45 - ------------------- --------- --------- --------- ---------Total- Q3 254 206 23 26- Q4 292 252 16 12 --------- --------- --------- ---------Six months to 31 March 546 458 19 18------------------ --------- --------- --------- ---------Q3 is the three month period to 31 December; Q4 is the three month period to 31March Total revenue Total revenue in the second half increased by 18% on an underlying basis (19%reported), with consistent double-digit growth in both the retail and wholesalechannels and in all regions except Spain. The modernisation of our core icons,our diversified product offering and consistent marketing message continue toappeal to consumers globally. Retail Retail sales, which accounted for over 50% of total revenue in the second half,increased by 17% on an underlying and reported basis. Non-apparel continued tooutperform, driven by handbags, shoes, soft accessories and men's accessories.Product innovation is driving strong growth in apparel in areas such asseasonless and fashion outerwear, knitwear and dresses. Comparable store sales increased by 6% in the fourth quarter and the second halfas a whole, although the competitive environment became more volatile as theperiod progressed. In the United States, there was double-digit comparable storesales growth in the second half, boosted by strong performances in tourist andoil-producing cities. Europe and Asia Pacific both showed positive comparablestore sales growth, with Italy, Germany, Hong Kong and Singapore among ourstrongest markets. As expected, comparable store sales in Spain remained downyear-on-year, reflecting a difficult retail environment. In the second half, we opened a net nine mainline stores including one inBelgium, one in Aspen, Colorado and our first ever childrenswear standalonestore, located in Hong Kong. We also opened nearly 40 concessions (including theconversion to retail of over 20 small Spanish babywear shop-in-shops) and fiveoutlets. There was a 12% increase in average selling space year-on-year duringthe second half. Wholesale Wholesale revenue, which accounted for 40% of total sales in the second half,increased by 25% on an underlying basis (28% reported), in line with ourguidance. As with retail, non-apparel and outerwear were the best performingcategories. A more balanced product offer, the more frequent flow of goods tocustomers and our basic replenishment programme contributed to growth in allranges. In North America, our product and marketing strategies resulted in increasedpenetration of our brand in department stores in key product categories. Therewere very strong performances from North America and Europe, where wholesalerevenue by origin in both regions increased by over 40%. Sales growth in Asiawas in excess of 20%, with particular strength in China. Spain remained weakyear-on-year. Licensing As expected, total licensing revenue in the second half was unchangedyear-on-year on an underlying and reported basis. The weakness of the Yenreduced reported revenue and profit by nearly £2m in the second half, althoughthe strength of the Euro countered this. Reflecting phasing differences, licensing revenue from Japan was marginally downon an underlying basis in the second half. There was good volume growth in ourglobal product licences, including the successful launch of our new fragrance,Burberry The Beat. The non-renewal of certain licences, predominantly inmenswear, as part of our strategy to move to a more consistent global productoffer, also affected revenue growth. Outlook Retail: In the year to March 2009, Burberry expects average selling space toincrease by 12-13% year-on-year, including about 15 mainline store openings. Wholesale: Based upon orders received to date, Burberry expects wholesalerevenue in the six months to September 2008 to increase by around 10% on anunderlying basis. While Spain is expected to show further weakness, this will becountered by good growth in all other regions, especially North America (up byover 20%) and Emerging Markets, as we pursue our strategy of investing inunder-penetrated markets. Licensing: In the year to March 2009, Burberry again expects broadly flatunderlying licensing revenue, with modest volume growth in apparel in Japan andgood volume growth from our global product licences offset by the non-renewal ofcertain other licences. The impact of the Yen exchange rate on reported revenueand profits is expected to be minimal. Balance sheet: Net debt at 31 March 2008 is expected to be approximately £70m(30 September 2007: £89.2m). There will be a mid to high single-digit millionpound interest charge in the year to March 2008. Enquiries Burberry 020 7968 5919Stacey Cartwright Chief Financial OfficerFay Dodds Director of Investor Relations Brunswick 020 7404 5959David YellandLaura CummingsRobert Gardener 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, selling 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; and pursue operational excellence. • At 31 March 2008, Burberry had 97 retail stores globally, with 231 concessions and 40 outlets. • 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:
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