Burberry First Half Sales Jump 30%

London– Burberry Group Plc reported today that its first half sales increased 30% as demand for its luxurygoods increased in key markets.

Total revenue for its first and second quarters rose to 830 million pounds (about $1.29 billion), up from 641 million pounds from the prior year and beating analysts’ estimates for sales of 818 million pounds. The results were lead by a 44% gain in its retail sales.

Burberry, which didn’t reports its earnings, said that comparable store sales in its second quarter ended Sept. 30, were up 16%.

The company said best performing markets included New York, London, Paris, Hong Kong,Taipei and Dubai. Greater China, which accounts for 10% of total sales and where Burberry now wholly owns its retail outlets, had comparable store increases of 30%.

Its wholesale revenue climbed 10%. ExcludingChina, third-party sales climbed 20% on a current exchange rate. Licensing revenue advanced 12%.

Burberry also said it plans to open at least 10 stores in the second half of its fiscal year, including outlets in China, Latin America and Paris.

‘No Signs of a Slow Down’

The results met helped allay analysts fears that luxurygoods sales might decline upon worries about the Eurozone economies, and even concerns that China, the fastest-growing luxury market, might be slowing down, too.

Burberry’s “extremely strong” report “confirms more or less what other companies have been saying: There are no signs of slowing demand,” said Davide Luigi Vimercati, an analyst at Unicredit. “The read across for the sector is positive.”

But when Burberry projected that its wholesale business would slow to only a mid-single digit growth in the second half, some analysts viewed that as a pull-back due to economic uncertainty.

“There’s absolutely no signs of any slowdown, it’s all contingency planning,” said Stacey Cartwright, chief financial officer, who attributed to lower forecasts to the shift in its business from wholesale to retail and tougher comparisons in the next two quarters. But added that the company is in a better position for a slowdown than it was in 2008.

Noting that there’s been no apparent shift in buying patterns, Cartwright said “the metrics we measure have remained pretty consistent across the quarters.”

The “global luxury consumer has become more important over the last couple of year,” Cartwright said, with tourists from Russia, China and India helping sales in flagship markets.

 

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