(Recasts, adds detail on results)
LONDON (Thomson Financial) - Burberry Group Plc, the luxury brand, reported
Wednesday a better than expected 11 percent increase in full year adjusted
operating profit, reiterated its guidance for the current year and said brand
development "remains strong".
In the year to March 31 2008 the group made an adjusted operating profit of
206.2 million pounds -- a rise of 14 percent at constant exchange rates.
This compares to analysts consensus forecast of 205 million pounds and is up
from 185.1 million pounds in the previous year.
Adjusted operating profit is calculated before 19.6 million pounds of costs
related to the group's 'Project Atlas' infrastructure redesign initiative
announced in 2005 and net profit of 15.1 million pounds relating to the sale of
its Haymarket headquarters.
Pretax profit increased 25 percent to 195.7 million pounds on revenue of
995.4 million pounds, up 17 percent or up 18 percent at constant exchange rates.
Both retail and wholesale divisions increased sales at constant exchange
rates by 20 percent, with continued success in luxury handbags and a doubling of
shoe sales.
Retail was boosted by a 12 percent year-on-year increase in average selling
space. Wholesale benefited from a particularly strong performance in Europe
(excluding Spain), North America and emerging markets.
Licensing revenue increased 3 percent at constant exchange rates helped by
strong growth from fragrance.
"All of this was achieved in an external environment that became
increasingly challenging during the second half," chief financial officer Stacey
Cartwright told reporters.
A final dividend of 8.65 pence was proposed, making 12.0 pence for the year,
an increase of 14 percent, payable from adjusted diluted earnings per share of
31.6 pence, up 9 percent.
Chief executive Angela Ahrendts said Burberry's revenue and profit growth
demonstrates the robustness of the business in challenging times, with
consistent performance across all regions, channels and products.
"Brand momentum remains strong and we are investing in the future,
continuing to grow and innovate our iconic outerwear, while developing exciting
new businesses such as shoes, jewellery and childrenswear," she said.
In the year to end-March 2009, Burberry expects average selling space to
increase by 12 percent to 13 percent year-on-year, including about 15 mainline
store openings.
It expects wholesale revenue in the six months to end-September 2008 to
increase by around 10 percent at constant exchange rates. Spain is expected to
show further weakness offset by good growth in all other regions, especially
North America (up by over 20 percent) and emerging markets.
Full year licensing revenue is expected to be "broadly flat" at constant
exchange rates, with modest volume growth in apparel in Japan and good volume
growth from global product licences, offset by the non-renewal of certain other
licences. The impact of the Yen exchange rate on reported revenue and profit is
expected to be a positive of about 2 million pounds.
Burberry flagged current year capital expenditure of 90 million pounds to 95
million pounds, up from 48 million pounds in the year to end-March 2008.
Net debt as of March 31 was 64.2 million pounds, down from 89.2 million
pounds last year. The current year net interest charge is expected to increase
from last year's 6 million pounds.
Going forward, Burberry reckons it is appropriate to carry year-end net debt
of up to 100 million pounds, enabling the group to return any funds not required
for investment to shareholders through share buybacks.
Cartright said the group does not need acquisitions to grow its business.
"We're quite happy with the level of organic opportunities that we have
within the business in all of the extended product categories ... There's a lot
of opportunity for Burberry to grow under its own steam," she said.
She declined to comment when asked if Burberry had received any takeover
approaches.
Last month shares in the group rose sharply on market talk of a possible bid
from Coach Inc, the U.S. handbag maker.
At 8.55 a.m. shares in Burberry were down 1-1/2 pence at 505-1/2 valuing the
business at 2.19 billion pounds.
james.davey@thomsonreuters.com
jdd/ejp/jdd/ejp
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