Chinese Demand Boosts Burberry
Luxury-clothing retailer Burberry PLC said Thursday its net profit more than doubled, boosted by increasing popularity with Chinese shoppers and double-digit growth at both its retail and wholesale operations. The British clothing and accessories company—known for its classic raincoats and famous red, black and camel-colored check design—reported net profit of £208.4 million ($339.6 million), up from £81.4 million last year, and raised its full-year dividend by 43% to 20 pence. Pretax profit before exceptional items, a figure closely tracked by analysts, rose 39% to £297.9 million. The company had already announced a 21% rise in sales to £1.55 billion in April.
Luxury retailers have enjoyed a strong turnaround in their fortunes since the global economic crisis wiped the shine off high-end sales in 2009, driven by growth from emerging markets. China in particular has proved a powerhouse of sales, both in the country itself as well as from Chinese tourists buying luxury goods in Europe. Emerging-markets operations accounted for almost 16% of Burberry’s sales across both its retail and wholesale operations, up from 11% last year.
Burberry is playing to these trends by earmarking the bulk of its capital expenditure for its owned retail stores in emerging markets, as well as refurbishing and extending retail space in capital cities such as London—where tourists from emerging markets like China, Russia and India make up an increasingly large proportion of customer sales. Burberry forecasts capital expenditure in the 2012 fiscal year of between £180 million and £200 million, partly reflecting the delayed spend from the prior year coming into fiscal 2012. The investment will be clustered around European cities including London, Paris and Milan, Chicago in the U.S. and Hong Kong, Shanghai and Saõ Paulo in China and Brazil.
Burberry Beijing – 13 April 2011