UK: Burberry Q3 sales rise beats expectations
- Q3 underlying revenues up 9% to GBP613m
- Underlying retail revenues up 13% to GBP464m
- Wholesale revenues down 5% to GBP120m
Luxury goods business Burberry outstripped market expectations with a 9% rise in underlying revenues in the third quarter, boosting retail revenues by 13% and comparable store sales by 6%.
The company said outerwear was responsible for about half of mainline growth, with scarves, men's tailoring and accessories also outperforming.
However, wholesale revenues were down 5%, with the company forecasting second half underlying wholesale revenue down by low to mid-single digits in percentage terms.
Burberry recorded growth in the US, Asia travel retail and emerging markets, but said this was more than offset by weaker trading in Europe.
Hailing a "particularly strong" week's trading in the run-up to Christmas, CEO Angela Ahrendts said: “In an otherwise difficult quarter, core outerwear, men's and digital all outperformed.
“We expect the external global environment to remain challenging, but see continued opportunities to drive productivity in our existing businesses, while investing for growth in under-penetrated regions, product categories, channels and mediums.”
A note from analyst Charles Stanley highlighted the prospects for increased confidence among global luxury goods consumers and said: “Under such conditions, our expectation is for Burberry to deliver further healthy growth in earnings and dividends over the medium term.”
While analyst Bethany Hocking at Investec added: "The company remains cautious and points to volatile trading and weak footfall, but nevertheless Burberry had a better Christmas than expected."
And Jon Copestake, retail analyst at The Economist Intelligence Unit, notes: "The underlying growth in these latest figures highlights a newfound confidence that, after a slight wobble in 2012, China remains on track to deliver growth. Burberry also looks set to broaden its appeal and exposure in 2013 by recruiting Romeo Beckham to model products.
"However, luxury retailers in general may be revisiting their Chinese operations soon. China's new Premier recently spoke out against ostentatious displays of wealth, and inflated luxury price strategies are encouraging consumers to shop abroad more often. Both could potentially undermine ongoing store investments in China."
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