LONDON -- Burberry Group (LSE:BRBY) is up more than 4% in London trade as of 9:30 a.m. EST after this morning's trading update told us underlying total revenue jumped 9% to 613 million pounds.
Retail revenue was a strong performer, with outerwear -- including Burberry's much-loved trench coat -- contributing "about half of mainline growth." Comparable-store sales increased 6%. Asia-Pacific (led by Hong Kong and China) and emerging markets saw double-digit growth. There was low-single-digit growth in the Americas, Europe was broadly unchanged, and Korea and Italy remained weak. This all led to total retail revenue advancing 13% on underlying figures to 464 million pounds.
The company's wholesale revenue stuttered, though, with a weak Europe to blame: The underlying figure was down 5% to 120 million pounds, and management admitted that "H2 underlying wholesale revenue [is] now expected to be down low to mid single-digit percentage year-on-year."
The trading update confirmed Burberry's momentum in expanding the business, revealing that seven new stores and four concessions were opened, including the new flagship Chicago store and the first concession in the United States (Herald Square, New York), while two stores and five concessions were closed. For the second half of FY 2013, average retail selling space is on track to increase by about 14%, biased toward flagship markets in Asia-Pacific and Europe.
Underlying licensing revenue increased 4% to 29 million pounds, helped by double-digit growth from its global product licenses. Elsewhere, the integration of beauty and perfume is on track following the company's decision to bring it in-house, while there were strong performances by digital commerce, and the spring 2013 advertising campaign generated record social-media engagement.
CEO Angela Ahrendts commented:
Burberry delivered 13% underlying retail growth in the third quarter, benefiting from a particularly strong week in the run up to Christmas. In an otherwise difficult quarter, core outerwear, mens and digital all outperformed. We expect the external global environment to remain challenging, but see continued opportunities to drive productivity in our existing business, while investing for growth in under-penetrated regions, product categories, channels and mediums.
All in, the trading update confirms that Burberry is continuing its drive and defying the warning of slowing growth in September 2012 that sent the shares crashing 30%. Indeed, Burberry has recovered from previous setbacks in the past: During 2008 and 2009, the group reported profits falling from 200 million pounds to 175 million pounds, and the shares collapsed from 566 pence to 160 pence -- but then went on to expand tenfold within three years as the business recovered strongly. Such potential returns suggest it may pay to keep an eye on Burberry, especially if the company continues to issue positive trading statements like today's.
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