16th Oct 2007 07:00
Burberry Group PLC16 October 2007 16 October 2007 Burberry Group plc First Half Trading Update Burberry Group plc, the global luxury company, reports on trading for the sixmonths to 30 September 2007. First half highlights (on an underlying basis*) • Total revenue increased by 19% • Retail revenue up 25%, with comparable store sales growth of 11% • Wholesale revenue increased by 16% as expected, with a further mid-teens percentage increase forecast for the second half • Licensing revenue up 5% • Increased investment in infrastructure, including Atlas, to support growth Commenting on this performance, Angela Ahrendts, Chief Executive Officer, said: "We are delighted with Burberry's 19% underlying increase in revenue in thefirst half of the year. Our new luxury outerwear, apparel and non-apparelcollections, combined with our compelling marketing campaigns, have again drivendemand in both our retail and wholesale channels. This performance is consistentwith our profit expectations for the full year as we continue to increase ourinvestment in the infrastructure of the business to support this strong growth." 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 interim results for the six months to 30 September2007 on 14 November 2007. * Underlying change is calculated at constant exchange rates. Certain financial data within this announcement has been rounded. Revenue by origin of business Six months to 30 September % change£ million 2007 2006 reported------------------ --------- --------- ---------Europe (excluding Spain) 169 127 33Spain 82 87 (5)North America 96 80 20Asia Pacific 102 98 4 --------- --------- ---------Total 449 392 15------------------ --------- --------- --------- Revenue by channel of distribution Six months to 30 % change September£ million 2007 2006 reported underlying------------------ --------- --------- --------- ---------Retail- Q1 97 82 18 25- Q2 105 87 21 26 --------- --------- --------- ---------Six months to 30 September 202 169 20 25------------------ --------- --------- --------- ---------Wholesale- Q1 56 38 47 51- Q2 151 144 5 7 --------- --------- --------- ---------Six months to 30 September 207 182 14 16------------------ --------- --------- --------- ---------Licensing- Q1 15 15 (3) 6- Q2 25 26 (3) 5 --------- --------- --------- ---------Six months to 30 September 40 41 (3) 5------------------ --------- --------- --------- ---------Total- Q1 168 135 24 30- Q2 281 257 10 13 --------- --------- --------- ---------Six months to 30 September 449 392 15 19------------------ --------- --------- --------- --------- Q1 is the three month period to 30 June; Q2 is the three month period to 30September Retail and wholesale revenue by destination Six months to 30 % change September£ million 2007 2006 reported underlying------------------ --------- --------- --------- ---------Europe (excluding Spain) 138 110 26 26Spain 75 75 1 1North America 98 81 20 29Asia Pacific 83 76 9 16Other 15 9 71 71 --------- --------- --------- ---------Total 409 351 17 21------------------ --------- --------- --------- --------- Total revenue Total revenue in the first half increased by 19% on an underlying basis (15%reported), further reinforcing the strength of the Burberry brand andstrategies. By channel, retail sales increased by 25% on an underlying basis. Byregion, both Europe (excluding Spain) and North America grew in excess of 20%underlying; and by product, non-apparel increased by 35% underlying. Retail Retail sales, which accounted for 45% of total revenue in the first half,increased by 25% on an underlying basis (20% reported). Comparable store sales grew by 11%, driven by strong autumn/winter productdesigns, by cohesive advertising and marketing campaigns and by the morefrequent flow of new products to our stores. Luxury handbags, women's runwayapparel and outerwear continued to perform well, further increasing the averageunit retail price in our mainline stores. Comparable store sales growth wasparticularly pleasing in the US, Italy and other parts of Continental Europe,including our Spanish womenswear concessions. In the first half, there was a 12% increase in average selling spaceyear-on-year. The net addition of 11 stores, 13 concessions and two outlets inthe period included six in the US, four in Italy and 10 throughout Asia. Wholesale Wholesale revenue, which accounted for 46% of total sales in the first half,increased by 16% on an underlying basis (14% reported), consistent with ourexpectations. This performance reflects the strength of the autumn/winter collection which wasshipped to wholesale customers predominantly during the second quarter. As inretail, revenue growth was driven by the appeal of the product, by the morefrequent flow of product to customers with the new market calendar and by basicreplenishment. While Spain remained down year-on-year, the US showed particularstrength with growth in key accounts of over 40%. Europe (excluding Spain) andemerging markets also performed well. Licensing Total licensing revenue in the first half increased by 5% on an underlying basis(down 3% reported). The weakness of the yen reduced reported revenue and profitby around £3m in the first half. There was growth from non-apparel licences inJapan and from the global eyewear licence, where the new product range waslaunched in late 2006. Investment in infrastructure The implementation of Project Atlas continued successfully in the first half,with further progress in both improving business processes and in installing newIT systems. To accommodate the strong growth in our business, we have increasedour investment in both areas. To mitigate the risks of implementation at a time when Burberry is growing sostrongly, we have delayed certain elements of the IT roll-out into the thirdquarter. This re-phasing has led to some additional spend, both in operatingcosts within the business and in IT resources. As a result of the latter,overall costs relating to Atlas in the current financial year are now expectedto be approximately £19m (previously £15m). This still brings the total projectcost to just over £50m in the three year period. The programme remains on trackto deliver the targeted £20m tangible benefits to profit in 2007/8. We have also increased our investment in improving business processes around thegroup, including strengthening our global supply chain team, adding warehousecapacity to handle the strong growth in volume and upgrading our corporatefunctions. Outlook Retail: Average selling space is expected to increase by 12% year-on-year in thesecond half. Wholesale: Based upon orders received to date, Burberry expects wholesalerevenue in the second half to show a further mid-teens percentage increase on anunderlying basis. This builds on the strong performance of wholesale in thesecond half of last year (H1 2006/7: wholesale revenue +1%; H2 2006/7: +17% onan underlying basis). Spain is expected to show further weakness with thecontinuing erosion of multi-brand accounts, countered by good growth elsewhereacross the rest of Europe and the US. Licensing: For the full financial year, Burberry continues to expect broadlyflat underlying licensing revenue relative to last year. For the second half ofthe year, revenue is expected to be moderately down, largely reflectingdifferent phasing of royalty payments between halves and the non-renewal ofcertain menswear licences. The weakness of the yen is expected to reducereported revenue and profit by about a further £3m in the second half (about £6min the full year). 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. Thisannouncement does not constitute an invitation to underwrite, subscribe for orotherwise acquire or dispose of any Burberry Group plc shares. Past performanceis not a guide to future performance and persons needing advice should consultan independent financial adviser. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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