London—Despite what it called “a challenging macro environment, Burberry Group Plc reported today that its third quarter sales beat estimates.
For the quarter ended Dec. 31, Burberry posted a 22% increase in sales to 574 million pounds (about $882 million), slightly ahead of analysts’ average estimate of 569 million pounds. Excluding currency shifts, sales climbed 21%.
“The momentum at Burberry remains strong. We are mindful as ever of the challenging macro environment,” said Stacey Cartwright, chief financial officer, who reiterated the company’s full year profit estimate remains at 375 million pounds.
Sales increases were lead by the Asia-Pacific region where revenue climbed 36%. Sales rose 20% in Europe, 4% in the Americas and 31% in the rest of the world, on an underlying basis, Burberry said.
Retail sales, which accounted for about 70% of quarterly revenue, climbed 23%, excluding currency shifts, and 13% on a comparable basis. Comparable store sales in China continued at 30%.
Flagship Sales Buoyed by Luxury Travelers
“The traveling luxury consumer drove outperformance of flagship markets such as London, Paris, Hong Kong and Las Vegas,” Cartwright said. “We’ve seen a consistent performance along this quarter. Mainline stores actually outperformed outlets.”
While the company said some of its European consumers, particularly in Southern Europe, appear to be affected by the debt crisis as their spending slowed, sales to Chinese tourists at flagship locations remained strong.
The lower sales growth in the Americas reflected the company’s decision to cut back sales to department store outlets and focus on more profitable full-price sales. Demand in Burberry’s own stores in the Americas remained strong, Cartwright added.
Nearly half of Burberry’s increases in its retail division came from core outerwear and large leathergoods. The Burberry London range contributed to “strong growth” in average selling prices, the company noted. Other best performing categories included knitwear, men’s tailoring, fragrances and watches.
Burberry’s wholesale revenues rose 15% at constant exchange rates, helped by rescheduling deliveries to the third quarter from the fourth. For the second half, Burberry reiterated that it expects wholesale revenue to increase by a mid single-digit percentage at constant exchange rates.
Licensing revenue rose 12% on an underlying basis. For the year, licensing revenue is expected to increase by a mid single-digit percentage, excluding currency fluctuations, the company estimated.
Burberry lowered its forecast for growth in average retail selling space to as much as 13% to 14% in the second half from 15% due in part to the closure of some concessions in Spain.
“Nothing wrong with the overall numbers, however the poor performance in the U.S.and the weak 4Q guidance may worry the market,” Liberum analysts wrote today in a research note.