More on Burberry
Burberry: H2 trading statement
Burberry’s sales growth in the second half of 3% (at CER, excluding the effect of acquisitions) was in line with the first half. As in the first half retails sales growth remained strong thanks to expansion, but like-for-like growth is likely (no numbers are disclosed) to have been low. The growth in retail was, again as in the first half, largely offset by the decline in wholesale.
One thing that is encouraging is that license sales increased 6%, ahead of total revenue growth and therefore improving the sales mix (license sales are, by nature, almost pure margin).
The current year is likely to produce higher growth than last. Retail sales growth is likely to be slightly lower, with a planned expansion in selling space of 10% but the company expects wholesale sale to return to growth so it will no longer be such a drag on the total. Licensing revenue is expected to be flat.
Burberry is not particularly cheap against the retail sector at 460p, on a historical PE of 18× (on estimated 2005/6 earnings) with a yield that is well under 2%. It does have a lot of room for continued growth through expansion, but the patchy performance of wholesale and licensing created doubts as to the strength of the brand.
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