Burberry revenues continue to rise beyond expectations

FASHION house Burberry Group Plc’s first quarter revenues rose 10%, slightly ahead of expectations, with strong sales worldwide except in its home market which continued soft, the company said yesterday.

Burberry’s revenues rose to £113.7 million (€165.1m) in the three months to end-June.

“Burberry is off to a great start,” finance director Stacey Cartwright said Burberry also said it was buying its distributors in Taiwan including 12 retail stores and various concessions for £9 million and said the new business should add £2 million of operating profit in 2006/07.

Burberry shares, which outperformed their sector by 7% over the past 12 months, rose 3.9% to a fresh record high at 428 pence in early trading to value the business at about £2.1 billion.

One market source said hedge funds’ short positions in Burberry were at their highest level so far this year, at about 10 days’ volume equal to 22 million shares, and some might be closing out their positions after the solid trading update.

Burberry’s retail sales, which accounted for 53% of revenues, rose 9% to £60.8m.

Cartwright said the gains were “driven by contributions from newly opened and refurbished stores and marginal gains at existing stores.”

Merrill Lynch said in a broker note: “While we remain convinced that Burberry can beat expectations again this year, we leave our numbers unchanged at this point given the limited contribution of the first quarter to full-year sales.”

Under the stewardship of chief executive Rose Marie Bravo, shipped in from Macy’s and Saks Fifth Avenue in 1997 to rescue the stodgy brand, Burberry’s fusty “heritage” image has been spiced up with a sexy, contemporary sassiness.

Pink raincoats, mini-capes, fragrances and bikinis were added to the classic camel, red and black check whose heritage stretches back to the days of Queen Victoria.

Burberry is 66%-owned by Britain’s GUS Plc which unveiled plans on May 25 to break itself up in a bid to net more value for its shareholders, starting with the demerger of Burberry later this year.

Analysts had long argued that GUS would be worth more to shareholders as individual companies than as a conglomerate. The decision to split the group follows a review started last year.