Burberry H2 sales surge
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Luxury goods retailer Burberry said sales for the second half of the fiscal year have risen 13 percent to £390 million. Surpassing expectations, the increase resulted from new and existing stores and offset a 7 percent drop in wholesale turnover. Underlying group revenues rose 3 percent.
The company said that it had reached the "tipping point" in its shift from mainly being a fashion wholesaler to being a global luxury goods house. Chief executive Rose Marie Bravo said that the spring collection had been well received and that a television ad featuring Oscar winner Rachel Weisz had caused sales to soar 16 percent in the last four months.
"Consumers' favourable response to spring merchandise, particularly women's wear, and an exciting advertising campaign contributed to strong retail performance," she said. Bravo will become vice chairman of the company in July.
The drop in wholesale revenues in the US was attributed to the "ongoing adjustment of the brand's wholesale/retail balance". Burberry also said that "soft demand (in Spain) resulted in a significant underlying sales decline" in its wholesale business. However, Bravo said the company is already combating this problem by completing the "strategically important shift to a (retail) concession format for a significant portion of our business in Spain."
Bravo will soon be succeeded by Angela Ahrendts, who together with CFO Stacey Cartwright will oversee the reorganisation of Burberry's supply chain, back-office operations and licensing business.
Her former tenure with Liz Claiborne should stand Ahrendts in good stead to deal with the operational side of the business. Her experience with various aspects of retailing, like supply chain management, is expected to help focus the growth of the company.
Ahrendts was lured away from the US retailer by Burberry with a financial package of up to £15.6 million over three years. Shareholders are waiting for a smooth transition when Bravo steps down.
The company's shares rose 3.3 percent to £461.75 in trading on Wednesday, an additional rise on top of about 10 percent last year.