REPORT_ Burberry has announced a double-digit growth with revenues rising 14 percent to reach 1.1 billion pounds (1.7 billion dollars) in the first half, reflecting a strong performance across all regions and continued digital growth. September also saw the successful launch of the My Burberry fragrance. Retail revenues were up 748 million pounds (1,202 million dollars), up 15 percent during the first half under review. The first quarter’s 12 percent comparable sales growth was in line with company’s expectations but slowed in the second quarter to 8 percent.
Commenting on the financial development, Christopher Bailey, Chief Creative and Chief Executive Officer, said, “This has been a strong first half for Burberry, with sales growth of 14 percent reflecting our ongoing brand and business momentum. Looking ahead, while mindful of the more difficult external environment, we have never been better prepared internally for the all-important festive periods, with our teams intensely focused on delivering outstanding products and experiences, alongside continued investment to drive productivity and profitable growth over the long term.”
In mainline retail, comparable sales growth was relatively balanced between women’s, men’s and accessories, between fashion and replenishment, and between average selling price and volume. Product highlights included rainwear, driven by the relaunch of the heritage trench coat, soft accessories, women’s Prorsum and solid leather bags and continued outperformance from men’s tailoring.
By region in the first half, there was double-digit comparable sales growth in Asia Pacific and the Americas and mid-single-digit growth in EMEIA. In the second quarter, Asia Pacific saw some softening in growth from Chinese consumers both at home and when travelling; the Americas delivered growth similar to last year and EMEIA saw some improvement from the first quarter. Combined, this delivered 8 percent comparable sales growth in the second quarter, balanced across the regions.
During the first half, the Group opened nine mainline stores and closed eight. Six airport stores were opened in Hong Kong, London Heathrow, Barcelona, Madrid, Milan Malpensa and Rome.
Wholesale revenue in the first half increased by 13 percent underlying, up 8 percent at reported FX. Excluding Beauty, wholesale revenues increased by 5 percent underlying, unchanged at reported FX. This was ahead of guidance of broadly unchanged year-on-year, due to the re-phasing of shipments into the second quarter from the third quarter and higher than expected in-season orders. This was led by strong growth in Asia Pacific, specifically travel retail and mid- single-digit growth in both the Americas and EMEIA.
In the first half, licensing revenue declined by 3 percent underlying (down 18 percent at reported FX), consistent with full year guidance. Royalty income from Japan was largely unchanged year-on-year, while the global product licences (watches and eyewear) combined were down, reflecting phasing and the rationalisation and elevation of watch distribution.
In FY 2015, net new space is still expected to contribute low to mid-single-digit percentage growth to total retail revenue, now through a combination of about 20 mainline store openings and about 20 closures during the year. Excluding Beauty, the Group expects wholesale revenue at constant exchange rates to be down by a mid-single-digit percentage in the six months to March 31, 2015, with a more cautious approach from customers selling to the European consumer and in Asian travel retail markets. For Beauty, the fifth product division, wholesale revenue is still expected to grow by about 25 percent at constant exchange rates in FY 2015.