Burberry Group plc (LON:BRBY) receives a Christmas boost.
Burberry Group (LSE: BRBY) is currently up over 4% on the stock market at the time of writing, adding 54p to 1,379p, following a positive trading update this morning that saw underlying total revenue jump 9% to £613m.
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, with low single-digit growth in Americas and Europe broadly unchanged, and Korea and Italy remaining weak), all leading to total retail revenue advancing 13% on underlying figures to £464m.
The company's wholesale revenue stuttered, though, with a weak Europe to blame -- the underlying figure was down 5% to £120m, 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 2012/13, average retail selling space is on track to increase by around 14%, biased towards flagship markets in Asia Pacific and Europe.
Underlying licensing revenue increased 4% to £29m 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.
Chief executive officer 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 2008-9, the group reported profits falling from £200 million to £175 million and the shares collapsed from 566p to 160p... but then went on to expand 10-fold 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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> Sam does not own shares in any of the companies mentioned. The Motley Fool has recommended shares in Burberry.