By KATHY GORDON
LONDON—Luxury clothing and accessories maker Burberry PLC reported its third-quarter sales rose 27% from a year earlier to £470 million ($746.6 million), led by growing retail sales in China and at new stores.
The results pushed Burberry's shares to the top of the FTSE 100 leaderboard, up 3.5% or 38 pence to 1097 pence in recent trade.
Chief Executive Angela Ahrendts said in a statement that Burberry's adjusted profit before tax for the 2010 fiscal year will likely be at the top end of market forecasts. Burberry delivered "strong, consistent growth in both retail and wholesale and in every product division and region," she said.
Retail sales, which refer to sales within Burberry-owned stores, rose 36% excluding Spain. Wholesale revenue, including sales to department-store concessions, was up 15%.
Including sales from Spain, where Burberry's operations are being restructured, sales in the three months to Dec. 31 totaled £480 million, up from £380 million a year earlier.
Burberry's Spanish overhaul is indicative of the group's strategy to reclaim full ownership of its brand, despite having to spend £49 million in restructuring costs and writing off £130 million of impairment charges. This large and previously profitable business struggled during the economic downturn, and Burberry decided to end a tradition of producing a local collection for the Spanish market. The group's global collection will be rolled out across Spain for the first time this spring.
Burberry has been steadily extending its ownership of franchise stores over the past few years and added 50 Chinese franchise stores to its retail business in July 2010 at a cost of £70 million. The company now owns and controls its entire store portfolio in China and is growing retail space there faster than anywhere else in the world. Same-store sales in China grew 30% in the third quarter.
Luxury retailers have been enjoying a strong turnaround in fortunes, as growth in emerging markets has lifted sales out of the slump they suffered after the financial crisis. Demand in China, and from Chinese tourists in Europe, has been the strongest driver in increasing sales.
Swiss watch and jewelry maker Compagnie Financiere Richemont SA Monday reported a 33% sales increase for the three months to Dec. 31 amid accelerating Asian sales.
Source : http://online.wsj.com/article/SB10001424052748703954004576089160759658404.html?mod=rss_whats_news_us_business
