Burberry reports 27% surge in quarterly sales(70090)

Burberry Sales Rise 27% on Asia, Beating Estimates

Burberry Group Plc, the U.K. s largest luxury retailer, posted a 27 percent gain in first- quarter sales, beating analysts estimates, led by growth in Asia and deliveries to wholesale customers.

Revenue in the three months ended June 30 increased to 291 million pounds ($436 million) from 229 million pounds a year earlier, the London-based company said today. The average estimate of four analysts compiled by Bloomberg was 259.5 million pounds. Excluding Spain, where Burberry is closing a factory, sales climbed 30 percent to 282 million pounds.

Demand for luxury goods is accelerating as distributors restock and consumers spend more on high-end apparel and accessories. Burberry, known for its plaid designs, plans to increase capital spending by 86 percent this year, opening 20 to 30 stores in the Americas and Asia-Pacific regions, Chief Executive Officer Angela Ahrendts said.

It s a massive beat versus expectations, said Erwan Rambourg, an analyst at HSBC in London, who had estimated sales of 260 million pounds. You can be excited by retail.

Burberry rose as much as 2.6 percent in London trading and was up 4.5 pence, or 0.6 percent, to 794 pence as of 11:05 a.m. local time. The shares have risen 32 percent this year, making Burberry the sixth-best performer in the U.K. s FTSE 100 index.

The early read on autumn-winter 2010 collections, which arrived in stores from June, is that momentum is continuing, Chief Financial Officer Stacey Cartwright said on a conference call. We continue to outperform almost irrespective of what the local economies are doing, Cartwright said.

Selling Space

Excluding Spain and currency swings, revenue at Burberry stores open at least a year increased 10 percent in the quarter. Same-store sales increased more than 10 percent in the U.K., Italy, Germany, Hong Kong and Taiwan. The Americas grew at a low single-digit pace as promotional activity was reduced for a large part of the quarter, the company said.

Burberry increased average retail selling space by 8 percent in the quarter, opening eight stores. That boosted retail revenue by 6 percent on an underlying basis, the company said. Burberry said it plans to increase average retail selling space by about 10 percent this year.

Wholesale revenue, which accounts for about 30 percent of sales, gained 46 percent, excluding Spain and currency swings, the company said. That represented a rebound from the fourth quarter s 20 percent drop. Burberry said wholesale revenue will increase by a high-teens percentage in the six months through Sept. 30.

We are seeing significant increases in all regions except Europe, where the planned strategic rationalization of small specialty accounts continues, Cartwright said, citing some traction with U.S. department stores, which are giving more space to the brand, especially for spring-summer 2011 lines.

Burberry reports 27% surge in quarterly sales

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