Burberry profits rise 26% due to retail strength

Burberry profits rise 26% due to retail strength
Burberry is rapidly increasing its retail operations and seeing profits soar as a consequence

By Jon Whiteaker - 10:18AM - Wed 23rd May 2012

British fashion brand & retailer Burberry has today reported strong growth in revenues and profits for its full-year period thanks to the growing strength of its own-store operations.

Total sales of more than £1.8 billion worldwide helped boost the company’s reported profit before tax (PBT) for the 12 months ending March 31st 2012 by 24 per cent to £366 million.

Once interest payments and losses relating to Spanish operations have been discounted, adjusted PBT for the year stood at an even greater £376 million.

Much of this excellent growth can be attributed to its increasingly strong retail division which accounted for 68 per cent of all of Burberry’s business over the year (and 72 per cent during the second half), and saw its underlying sales rocket 31 per cent compared to the last financial year.

During the 52-week period 23 mainline stores were opened by the brand, including its first ever flagships in Hong Kong, Paris and Taipei, and this expansion looks set to continue with the business aiming to spend between £180 million to £200 million on increasing its retail space by between 12 per cent and 14 per cent this year.

Angela Ahrendts, CEO of Burberry, commented: “Burberry has completed another successful year, with revenue up 24 per cent and adjusted profit before tax up 26 per cent.

“An intense focus by our global teams on business, brand and culture in recent years has resulted in a strong foundation across channels, regions and products.”

The success of Burberry’s international strategy is underlined by the double digit like-for-like (LFL) sales growth experienced at its retail operations in China, Hong Kong, Singapore, Taiwan, UAE, Kuwait, Qatar, the UK , France, Germany and its stores in the Americas.

LFLs grew 14 per cent in total and floorspace increased 14 per cent, with acquired stores in China alone attributing six per cent of the group’s total underlying revenue growth.

Particularly popular with Burberry customers over the year have been its non-apparel items, with men’s leather & accessories goods seeing sales jump 50 per cent over the period, and general non-apparel sales up 22 per cent year-on-year.

Wholesale performance was more muted last year, reporting revenue growth of just eight per cent, although this still represents a decent showing given the brand’s global push into retailing.

Ahrendts added: “While we remain vigilant about the external environment, we will continue to invest in front-end opportunities within our brand, digital and retail strategies, to drive sustained, profitable growth and enduring customer engagement over the long term.”

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