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Burberry results rise again as Ahrendts bows out

Burberry’s last financial year under chief executive Angela Ahrendts has seen more growth, underpinned by double-digit sales increases in Asia-Pacific reported for its second half last week.

Group sales rose 19% to nearly £1.3bn in the six months to March 31, as retail revenues climbed 13% to £928m.

Fashion was up by double digits, with core outerwear and large leather goods accounting for nearly half of the growth. Men’s accessories, men’s tailoring and womenswear in the Prorsum line were highlighted as particularly strong categories.

Wholesale revenues excluding beauty rose 11% to £240m, which was partly due to the rephasing of deliveries and reorders. Licensing revenue climbed 2% to £37m.

This follows underlying group sales growth of 14% to £1.03m in its first half to September 30.

Burberry will announce its preliminary results for the 12 months to March 31 on May 21. Analyst consensus estimates turnover of £2.3bn.

Chief financial officer Carol Fairweather noted that the strong performance had come despite “soft” footfall, adding that conversion rates both in store and online had improved.

“Brand momentum is still strong, and declining footfall is a factor for the industry as a whole,” she said.

During the second half, Burberry opened 11 mainline stores – including a flagship in Shanghai – and closed nine, although Fairweather said these were strategic relocations rather than because of footfall.

At March 31, 2014, Burberry had 215 retail stores, 227 concessions, 55 outlets and 70 franchise stores. Its next store opening will be a flagship on Rodeo Drive in California in November.

As well as fashion, Burberry’s new beauty division had helped bolster results, with Fairweather saying Burberry saw “huge growth opportunities” in the market, in which Burberry was “massively under-penetrated”.

“Ultimately, we aim to become a top-10 player, but we are still far from that… Combining beauty and fashion is how we will differentiate ourselves – we see it as being one of our biggest growth drivers,” she added.

Despite strong revenue growth, the company has again warned that full-year results could be affected by wider economic issues and currency fluctuations.

Fairweather said that the company may consider shifting prices in some territories – notably Japan – but said nothing would happen in the short term:“Given the underlying health of the brand, we don’t feel the need to do anything different right now… we won’t be leading on price changes.”

Chief creative officer Christopher Bailey is now poised to take the reins fully over the next couple of months as Ahrendts leaves to take up her new role at Apple, although Fairweather would not specify a date. She said there was no other change in the management team.

“Christopher is stepping up with the team united around him,” she told Drapers.

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