Burberry upbeat despite 'disappointing' UK sales

Fashion house Burberry today announced a 7% rise in total third-quarter revenues, but said UK trading was disappointing.

The group, which is two-thirds owned by Argos-to-Homebase retailer GUS, said it held its course and delivered a “solid result” in the face of price-cutting by rivals in the UK and US.

It said the UK market was weak in the quarter, although continental European markets continued generally to perform well and US retail sales grew in line with increases in store space.

Chief executive Rose Marie Bravo said the group’s third-quarter performance had been consistent with management’s expectations for the financial year.

Its spring ranges had attracted a favourable initial customer reaction and the group was launching an advertising campaign.

“Burberry is well positioned as we enter the season,” she said.

Burberry said total revenues increased by 3% after accounting for changes in exchange rates.

The group said new store openings and refurbishments drove a 6% rise in retail sales at constant exchange rates in the third quarter to January 1.

During the quarter, it opened stores in Rome and Boca Raton in Florida, added two accessory concession outlets in Spain and completed major refits of shops in Paris and San Francisco.

On a year-on-year basis, average selling space increased by about 8% in the quarter.

In the US market, retail sales increased in line with store space growth despite a challenging outwear season, muted consumer response to some classic styles and deliberately restrained outlet store sales.

In Asia, sales in Korea continued to be volatile as a result of the difficult economic environment, resulting in a flat overall performance for the quarter.

Hong Kong experienced “vigorous” growth throughout the period while south-east Asia, boosted by new stores, achieved strong gains.

Burberry said it remained on schedule to open at least two concessions during the fourth quarter, resulting in the addition of about 7% of retail selling space in the 2004/5 financial year.

The bulk of the group’s turnover is generated through wholesale business as the company sells products though department stores and speciality retailers.

Total wholesale sales lifted by 5% at constant exchange rates and by 2% on a reported basis.

During the quarter, the group’s franchise partners opened three stores in China, second shops in Moscow and in Dubai and outlets in Copenhagen and Sao Paolo in Brazil.