Burberry hails Retail performance in second half

Iconic British luxury brand Burberry has reported a decent rise in underlying revenue in the second half as strong growth in Retail continued to offset a weaker performance in Wholesale.

Revenues totalled £1,116m in the six months to March 31st, up 9.0% an underlying basis, with Retail now accounting for 75% of total sales, up from 65% in the first half.

The quarterly breakdown showed that growth rates in Retail (and across the wider group) had accelerated in the final three months of the year.

The company opened 10 more stores during the period, including a flagship store in Chicago and a menswear store in Knightsbridge, London. Two shops were closed, bringing to total to 206 by the year-end, up 14 on last year.

Retail revenues rose 13% year-on-year with the key Asia Pacific region leading the way, especially Greater China. Burberry said that it saw double-digit growth in all four product divisions in Retail while outerwear, mens and digital all outperformed.

"With three-quarters of our revenue now generated in retail, we are pleased with the 13% growth in this channel in the second half, driven by continued innovation in product, marketing and customer service, especially over Christmas and Chinese New Year," said Chief Executive Officer Angela Ahrendts.

Wholesale revenues on the other hand, fell 3.0% over the year to £220m, as expected, owing to weakness in the largest region, Europe. This division now only accounts for 20% of group sales, down from 29% in the first six months of the financial year.

Licensing revenue was up 3.0% at £56m, in line with guidance.

Next yearBurberry said that it plans to open a further 25 mainline stores in the year to March 2014 and close about 15, while opening 10 concessions and closing 10.

"Openings are biased towards the evolution of the portfolio in China and further expansion in Latin America. Following two years of above average space growth, net new openings are planned to contribute low to mid single-digit percentage growth to retail revenue in FY 2014," the firm said.

Wholesales revenues, excluding Beaty, are expected to fall by 10% in the first half of the current financial year (ending September 30th) with customers planning more conservatively for Autumn/Winter 2013 season.