Burberry Full-Year Pre-Tax Profit Soars

Burberry

Burberry

London—Thanks to strong increases in its retail and wholesale sales, Burberry Group reported today a 39% surge in its fiscal 2011 pre-tax profit.

The British luxurygoods brand raised its full-year dividend and said that it expects to deliver a modest improvement in operating margin in fiscal 2012.

For the year ended March 31, Burberry’s pre-tax profit was 295.7 million pounds (about $481.88 million) compared with 211.4 million pounds last year. Adjusted pre-tax profit rose 39% to 297.9 million pounds from 214.8 million pounds a year ago.

Total sales increased 27% to 1.50 billion pounds (about $2.44 billion) compared with last year’s 1.19 billion pounds. Underlying revenue was up 24%. Gross margin improved 33% to 1.01 billion pounds from 761.2 million pounds in the previous year.

Retail revenues were a big growth driver for the company, increasing 36% over the year and now representing about 64% of sales compared to 60% in 2010. Moreover, the company reported double-digit revenue growth in retail and wholesale in all regions and all product categories.

On an underlying basis, retail revenue rose 32% in China, which transferred from wholesale to retail on September 1 last year, following the acquisition of former franchisees’ operations, which contributed 12% to the growth.

Leathergoods Sales Increase

Comparable store sales were up 11% with higher average selling prices and traffic in mainline stores. Asia Pacific and Europe delivered double-digit comparable growth in the year.

Burberry’s iconic outerwear contributed over half of apparel sales in mainline retail, helped by strong sales of both fashion and core styles. Non-apparel revenue grew 35% as large leathergoods showed strength, mainly in core replenishment styles and men’s accessories.

Furthermore, wholesale revenue grew 17% mainly sales to department stores, multi-brand specialty accounts, emerging market franchisees and Travel Retail. By region, Asia Pacific, the Americas and emerging markets all performed strongly.

“Burberry delivered strong operational and financial progress during the year, thanks to the consistent execution of our core strategies by our team and partners, more closely connecting our brand vision and values to consumers around the world,” said Angela Ahrendts, ceo.

Burberry is targeting further international expansion, hoping to boost property space by 12% to 13% over the next year, following huge initial success in the Chinese market.

In addition to expansion in China, Burberry also plans to refurbish or expand its retail stores in capitals, such as London where demand for luxurygoods is increasing from Chinese, Russian and Indian tourists.

Despite the sluggish recovery in most countries, the slow growth, Burberry intends to invest 180-200 million pounds on capital expenditure during the next 12 months after spending 108 million pounds in 2011.

“While mindful of global macro challenges in the current year, we will continue to invest to drive growth across our portfolio by channel, region and product,” Ahrendts added.

The company also lifted its full-year dividend per share by 43% to 20 pence from 14 pence a year ago.

 

Looking ahead to fiscal 2012, Burberry expects to deliver a modest improvement in operating margin. Licensing revenue is also expected to increase in the high single-digit percentage.

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