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Burberry plots retail expansion after sales growth slows

British heritage brand Burberry will continue to strengthen its retail arm this year despite experiencing a slowdown in revenue growth.

For the six months to March 31, total revenue increased 18% to £1.03bn, with like-for-like retail sales jumping 12%. Retail sales grew by an underlying 23% to £743m and wholesale revenue was up 7% to £230m.

The luxury brand, however, recorded a slowdown in growth from 2011 half-year figures, when total sales were up 30% to £860m, retail sales were up 42% to £596m and wholesale sales climbed 14% to £214m.

Burberry is focusing on building its retail footprint by opening larger stores, planning a 12% to 14% rise in average retail space to March 31, 2013.

Chief financial officer Stacey Cartwright said: “These larger stores will have lower sales densities but will generate good financial returns.”

She added that Burberry would open stores in Chicago, Hong Kong, Brazil and Prague. This summer the brand will open its highly anticipated 25,000 sq ft Regent Street store.
According to Bethany Hocking, analyst at Investec, flagships are of continuing importance for the brand: “The retail channel allows Burberry to retain total control over all aspects of the brand delivery, including store standards, product layout, inventory management and service standards.”

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