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Burberry remains confident as retail sales rise

Burberry said it is confident ahead of the crucial Christmas period, despite a first half decline in wholesale sales, as retail sales continue to rise.

The luxury heritage brand reported that pre-tax profit was down 19.6% to £78.4m for the six months to September 30, from £97m for the same period in 2008.

Total sales at Burberry rose 6% to £572.4m during the first half of 2009.

Retail sales accounted for 54% of Burberry’s sales at £311.6m, up 14% on last year, while wholesale sales accounted for 37.6% of total sales, a drop of 23% to £216.1m.

Like-for-like retail store sales were up 2%.

Burberry’s wholesale business is forecast to remain weak during the second half, although the decline is expected to slow to 15% against the 23% decline in the first half.

The drop in wholesale sales was largely due to Burberry’s closure of the Thomas Burberry label and the conversion of Burberry Middle East from wholesale to retail.

Burberry chief financial officer Stacey Cartwright said that wholesale orders are likely to be flat year-on-year.

Looking forward to Christmas, Cartwright said: “We’re very well positioned in that we carry replenishment inventory on our best sellers.”

London retail sales performed particularly well over the first half, boosted by the recent refurbishment of the Bond Street flagship store. Europe, excluding Spain, showed “double-digit” like-for-like sales growth, while Spain and the US markets notched up double digit sales declines. E-commerce sales were up 50% over the first half.

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