Bloomberg News

Burberry Sales Jump as Luxury Maker Navigates Tough Economy

January 18, 2012

(Updates with closing share price in fifth paragraph.)

Jan. 17 (Bloomberg) -- Burberry Group Plc, the U.K’s largest luxury-goods maker, reported third-quarter sales that beat analysts’ estimates and said it sees no reason to change full-year forecasts as it negotiates a “challenging” economy.

Revenue in the three months ended Dec. 31 climbed 22 percent to 574 million pounds ($882 million), the London-based company said today in a statement. That was higher than the 568.3 million-pound average of four estimates compiled by Bloomberg. Excluding currency shifts, sales climbed 21 percent.

Burberry, which gets more than half of sales in 25 so- called flagship markets including New York and Hong Kong, has said it can weather any fallout from Europe’s sovereign-debt crisis by focusing on wealthy clients in these cities. Chinese consumers, who spend an average 1,700 euros ($2,165) on luxury shopping when traveling in Europe, will help offset weakening local demand, according to CA Cheuvreux analyst Thomas Mesmin.

“The momentum at Burberry remains strong,” Chief Financial Officer Stacey Cartwright said on a call with reporters. “We are mindful as ever of the challenging macro environment.” The consensus analyst estimate for full-year pretax profit is about 375 million pounds, Cartwright said.

Burberry rose 1 penny to 1,301 pence in London. The stock has gained 9.8 percent this month.


Sales climbed 36 percent in the Asia-Pacific region, 20 percent in Europe, 4 percent in the Americas and 31 percent in the rest of the world, on an underlying basis, Burberry said.

Retail sales, which contributed more than 70 percent of quarterly revenue, climbed 23 percent, excluding currency shifts, and 13 percent on a comparable basis, Burberry said.

“The traveling luxury consumer drove outperformance of flagship markets such as London, Paris, Hong Kong and Las Vegas,” the trenchcoat maker said. Consumers in southern Europe have been more affected by the debt crisis than their northern European counterparts, Cartwright said on the call.

Comparable store growth in China continued at around 30 percent, Burberry said.

About half of the retail unit’s revenue increase came from “core” outerwear and large leather-goods, Burberry said. The Burberry London range contributed to “strong growth” in average selling prices, the company said.

Knitwear, men’s tailoring, fragrances and watches were among the fastest growing categories.

Expansion Plan Trimmed

Burberry lowered its forecast for growth in average retail selling space to as much as 14 percent in the second half, from 15 percent. The company had “a couple of extra closures” of Spanish men’s wear concessions and overestimated space in some new stores, the CFO said. “It’s nothing of any significance.”

Third-party sales rose 15 percent, excluding currency shifts, Burberry said. In the U.S., a “strong” performance in key department-store accounts and new shop-in-shops was offset by a planned rationalization of distribution, Burberry said.

For the second half, Burberry said it expects wholesale revenue to increase by a mid single-digit percentage at constant exchange rates, repeating a previous forecast.

Licensing revenue rose 12 percent on an underlying basis. For the year, licensing revenue will increase by a mid single- digit percentage, excluding currency moves, Burberry said.

--Editors: Sara Marley, Paul Jarvis.

To contact the reporter on this story: Andrew Roberts in Paris at

To contact the editor responsible for this story: Sara Marley at

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