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China helps Burberry to 32% revenue growth

By This Is Money
Updated: 05:48 EDT, 19 April 2011

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No hard-up retail story from Burberry as it plans to expand store space by more than 10% following a bumper finish to its financial year.

Higher in China: Retail growth was driven by its new stores in China

Reporting a 32% surge in revenues to £390m in the three months to March, the fashion house predicted full-year profits would ring in at the top end of expectations.

The 155-year-old maker of raincoats and handbags best known for its camel, red and black check, said it would increase store space by 12% to 13% by March next year, mainly in China, Latin America and the Middle East.

Burberry and the luxury sector has experienced a more rapid recovery than the rest of the retail sector, driven by demand from Chinese shoppers and tourists.

Angela Ahrendts, Burberry chief executive, said: 'Burberry had good early progress in China. 'While the luxury industry faces global challenges in the year ahead, we remain confident in our team's ability to outperform, underpinned by the consistent execution of our key strategies.'

The group said retail revenues were up 42% to £596m in the six months to March, while wholesale revenues gained 14% to £214m in the same period. Retail growth was driven by its new stores in China, but all regions experienced double-digit growth. It said its Burberry Prorsum and Burberry London brands outperformed.

The company opened seven stores in the final six months of the year, in New York, Milan, Beijing and Shenzhen in China, Delhi, Sao Paulo and Puebla in Mexico. Wholesale revenues were similarly driven by a surge in sales in China, but the Americas and Asia Pacific also outperformed.

The company's licensing division saw revenues decline 5% to £50m, but this was in line with expectations, as growth was offset by the planned termination of the Japanese leather goods licence in 2010. It warned licensing revenues in Japan, where a licensed dealer sells Burberry goods to about 800 outlets, would be broadly flat throughout the year.

Shares in the FTSE 100-listed company gained 67p (5.8%) to 1,213p after today's update.

Katharine Wynne, an analyst at brokers Investec, said Burberry's expectations of full-year profits to March 2011 at the top end of expectations implies a figure of £290m.

Ms Wynne added there was also scope to revise upwards its forecast for the year to March 2012.

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