Burberry sets sights on further growth

Fashion house Burberry pledged to ramp up expansion today as it celebrated an “outstanding” 12% rise in underlying earnings for its 150th anniversary year.

The group, famous for its distinctive black, camel and red check design, said continued strong demand for its luxury handbags – particularly its special anniversary range, the Burberry Icons Collection – helped lift earnings to £185.1 million in the year to March 31.

It will now look to increase its retail selling space by around 13% with the opening of 20 stores, particularly in the US.

Chief executive Angela Ahrendts said the group had achieved an “outstanding performance” as revenues rose to £850.3 million, up 15% on an underlying basis and a sharp acceleration from the 3% growth seen last year.

“We face the current year with confidence, given the strength of our brand,” she added,

Burberry said performance was also boosted by the popularity of its raincoats, for both men and women, while its newly launched eyewear collection and Burberry Summer scent helped raise licence revenues in the second half of the year.

New luxury products, effective marketing and the growth in accessories, including belts and shoes, helped retail sales increase by 24%. Retail now accounts for 48% of total group revenues, marking an important milestone for the company which has been transforming itself to a retail-led group, a move away from its previous wholesale-led focus.

Following a review of the company, the group has cut back on the number of goods on offer but upped prices and enhanced its luxury and high fashion elements of its business.

Seymour Pierce analyst Andrew Wade said: “The steps being taken by management to increase back office efficiencies, improve brand cohesion, increase the number of markets and encourage customers up the price architecture are sensible and are delivering top line growth.”

Pre-tax profits came in at £156.3m (€231m) after it was hit with £6.5m (€9.6m) of costs relating to the closure of polo-shirt factory in Treorchy, south Wales, with the loss of 300 jobs.

Burberry was founded in 1856 when 21-year-old draper’s apprentice Thomas Burberry opened a shop in Basingstoke, Hampshire, and started making outdoor apparel for sportsmen. It made a name for itself when its kitted out Norwegian explorer Captain Roald Amundsen for his expedition to the South Pole in 1911.