Luxury brand Burberry Group PLC (BRBY.L) Wednesday reported a 14 percent increase in Retail revenue for the third quarter, supported by significant comparable sales growth. Burberry said traffic remained weak offline but rose online, reflecting evolving consumer behavior.
Angela Ahrendts, CEO, said, ''In the all-important festive period, we are pleased with our 12% comparable sales growth, which was in line with our expectations. This performance reflects continuing strong brand momentum and our team's intense focus on retail execution...''
Ahrendts is stepping down this year to take up a new position with technology giant Apple Inc. (AAPL).
Retail revenue climbed 14 percent to 528 million pounds ($866.1 million), at constant and reported currency rates.
Comparable sales growth was 12 percent compared to 13 percent in the first half of the year.
Geographically, Asia Pacific again delivered double-digit percentage comparable sales growth, led by Greater China and a continued improvement in Korea.
Americas and EMEIA delivered mid to high single-digit comparable sales growth. Performance was robust in the UK, France and Germany, while Italy remained weak.
Among products, outerwear and large leather goods together contributed about half of mainline growth, while Mens accessories and tailoring witnessed strong growth. Burberry noted that scarves, small leather goods and Beauty benefited from the co-ordinated festive offer across all customer touchpoints. Burberry is directly operating Beauty, its fifth product division, from April 1, 2013.
During the quarter, Burberry opened a net five mainline stores including two in China, a fourth store in Mexico and the first Burberry Beauty Box in Covent Garden, London. Additionally, one store and two concessions previously operated by a franchisee were acquired in Thailand.
The company's outlook for fiscal 2014 is unchanged. Burberry achieved an operating margin of 17.1 percent in fiscal year 2013, excluding the benefit of a lower performance-related pay charge. For fiscal year 2014, Burberry continues to aim for a modest increase from that level, although there will be a dilutive impact from Beauty.
Net new openings are still planned to contribute low to mid single-digit percentage growth to retail revenue.
In Wholesale, excluding Beauty, Burberry expects underlying revenue to increase by a mid to high single-digit percentage in the six months to March 31, 2014, compared to 220 million pounds in the previous year.
Beauty is planned to deliver wholesale revenue of about 140 million pounds and incremental retail/wholesale profit of around 10 million pounds, reflecting the complex transition period and additional marketing investment behind fragrance launches.
Looking ahead, Angela Ahrendts said, ''At current levels, exchange rates will be a significant headwind in the second half and beyond, and the macro environment remains uncertain, but we are confident that our proven strategies will continue to deliver long-term value for shareholders."
BRBY.L ended up 0.6 percent on Tuesday at 1,469.00 pence.
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