LONDON–Burberry Group Plc got off to a strong start to its financial year. The 154-year-old luxury goods company–famous for its iconic red, black and camel colored check–jumped significantly in its first quarter, fueled by international growth and demand for its outerwear lines.
Underlying revenues, which exclude the effect of exchange rate changes, rose 24% in the three months to June 30, reported the company. The addition of new stores contributed to a 16% rise in retail sales, while same-store sales grew by 10%. Burberry currently has 139 store worldwide. Increased sell-throughs at full price also contributed to such strong results.
Non-apparel and outerwear were the strongest performing categories, and frequently updated capsule collections such as April Showers–edged plaid handbags, umbreelas and rubber boots–boosted sales.
Digital initiatives not only drove revenues but continue to reposition the century-and-a-half old brand as modern and cutting edge. Burberry streamed the Spring/Summer 2011 menswear show live with a ‘click to buy’ option, and also produced a live, global 3D braodcast at London Fashion Week in February. The company is also developing a consumer interactive ad campaign, where consumers use their computer mouse to control their views of the ad.
Wholesale revenues soared 46% due to increased supply chain efficiencies that improved the flow of goods and enabled deliveries to be re-phased into the first quarter.
Burberry’s licensing business showed a revenue rise of 14%, but that number is expected to fall by 5-10% at constant exchange rates in the year to March 2011.
“With double-digit sales growth in both retail and wholesale, Burberry has delivered a strong start to the year,” notes CEO Angela Ahrendts. “The clear momentum in the business and our robust financial position together reinforce our confidence to increase investment for the future, while continuing to enhance the brand.”
Europe was the most disappointing. While revenues increased 30% in Asia-Pacific and 26% in the Americas, they rose only 20% in Europe compared with a year ago. To that end, Burberry’s planned store openings (20 and 30 stores this year) will be mainly in the Americas and Asia Pacific. ”
With an increase of around 10% in average retail selling space expected this year, Burberry sees significant growth in all regions except Europe where its Spanish operations are being restructured.
“Our continued investment in industry-leading digital, service and product initiatives will further increase awareness, traffic and sales, to drive long-term profitable growth for all our stakeholders,” Ahrendts added.