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LONDON -(Dow Jones)- U.K. fashion house Burberry Group PLC (LSE:BRBY) (BRBY.LN) Wednesday reported an 11% rise in profit for fiscal 2008 and remained upbeat about its prospects despite the economic woes that have hurt others.
Chief Executive
Burberry, famous for its camel, red and black check design, so far hasn't been hit by fallout from the credit crunch. Other retailers, particularly those that sell house wares and clothing, such as DSG International PLC (LSE:DSGI) (DSG.LN), Home Retail Group PLC (LSE:HOME) (HOME.LN), Next PLC (LSE:NXT) (NXT.LN) and Marks & Spencer Group PLC (LSE:MKS) ( MKS.LN), have seen downturns in business as consumers grapple with rising living costs and seek out bargains.
Stripping out tax and costs related to the group's infrastructure revamp program, Project Atlas, Burberry reported an 11% rise in its closely-watched adjusted operating profit. The figure rose to GBP206.2 million for the year ended March 31, up from GBP185.1 million a year earlier and in line with market expectations of GBP205 million, thanks to a jump in sales and record store openings.
At 0740 GMT, Burberry shares were steady at 507 pence, valuing the group at GBP2.19 billion. The stock had risen on Tuesday ahead of the results, but have fallen 11% since the start of the calendar year amid concerns about the trading environment.
"Burberry's sales momentum should continue and outperform the broader luxury industry in 2008," said Citi, which has a buy rating on Burberry and 550 pence target price. Citi expects fiscal 2009 earnings before interest and tax consensus of GBP223 million, up 20% from a year ago, to remain broadly unchanged.
Annual net profit rose 23% to GBP135.2 million from GBP110.2 million a year earlier,driven by strong sales growth, 20 new mainline stores, 49 concessions and 10 franchise stores in Emerging Markets. The result also includes profit of GBP15.1 million from the relocation of its global headquarters.
Reported revenue rose 17% to GBP995.4 million in fiscal 2008 as shoppers snapped up Burberry's latest clothing collection, luxury handbags and shoes, Chief Financial Officer
In the current year, Burberry expects average selling space to increase by 12% to 13% from a year earlier, including about 15 mainline store openings.
Based on orders received to date, Burberry expects wholesale revenue in the first-half of fiscal 2009 to increase by around 10% on an underlying basis. Further weakness in Spain is expected to be offset by growth in all other regions, especially North America, which is up by more than 20%, and emerging markets like China, the Middle East and India.
Once again, Burberry expects broadly flat underlying licensing revenue, with modest volume growth in apparel in Japan and good volume growth from global product licenses offset by the non-renewal of certain other licenses. The favorable impact of the Yen exchange rate on reported revenue and profit is expected to be about GBP2 million. Capital expenditure is expected to rise to between GBP90 million and GBP95 million in fiscal 2009 from GBP49 million a year earlier, boosted by fitting out its new headquarters, opening new stores and revamping others, as well as supply chain and IT projects.
Burberry declared a final dividend of 8.65 pence a share, taking the total for the year to 12 pence. That compares with 10.5 pence in fiscal 2007.
Company Web site: http://www.burberrygroupplc.com
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(END) Dow Jones Newswires 05-28-08 0423 Copyright (c) 2008 Dow Jones & Company, Inc.
