Burberry growth slows slightly

Luxury British brand Burberry has posted a slight slowdown in quarter sales in its latest trading update with an 11 per cent rise in revenues for its first quarter, down from 15 per cent growth in the fourth quarter of the previous year.



In theBurberry growth slows slightly three months to June 30, total revenue rose 11 per cent to £408m, helped by continuing growth in Asia, which accounts for a higher proportion of Burberry’s revenue than any other region.

Retail revenue rose 14 per cent to £280m, with like-for-like store sales growing by 6 per cent, led by the UK, France, Germany and China. Growth was helped by strong sales of men’s tailoring and accessories, as well as an increase in average selling prices, which was driven by product innovation and a higher penetration of Burberry Prorsum and London.

During the first quarter, Burberry opened six mainline stores including its fourth store in Brazil and Russell Street in Hong Kong, and closed two. In the year to 31 March 2013, a 12-14 per cent increase in average retail selling space is planned, with a shift from smaller to larger format stores.

Burberry’s wholesale arm also saw growth posting revenue of £102m, an increase of 9 per cent, benefitting from earlier delivers and included the planned rationalisation in the US and Europe. However, licensing revenue fell an underlying 5 per cent to £26m, impacted by the phasing of licence terminations.

Chief executive officer Angela Ahrendts described the company’s first quarter as “robust” in “a more challenging external environment”. She added: “Sales in retail, now about 70% of the business, increased by 14%, with initiatives to elevate brand equity balanced by improved store productivity and new space.

“Building on our balanced business model and strong operational foundation, we continue to invest in our retail, digital and marketing strategies to drive long-term sustainable growth, while remaining responsive to the changing external environment.”

Burberry also confirmed that its two large flagship store’s in London and Chicago are both due to reopen later this year, with London’s Regent Street thought to be in September, as well as planned investments in flagship markets including Milan, Hong Kong and Shanghai.

 

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