Burberry predicts 'top half' year

13th Oct 2010 07:03

Burberry's underlying sales matched forecasts for the first half and the trendy clothing group is predicting full-year profit to be in the top half of the range of estimates.Underlying sales for the six months to 30 September jumped 17%, or 21% on a reported basis, to £641m. Comparable store sales rose 9%.Retail sales increased by 20% on an underlying basis (24% reported), driven by outerwear and large leather goods. New space generated 7% of the improvement and China 4%.Much of the revenue growth came from Asia Pacific, up 37% underlying to £175m, Europe was up 12% at £224m and the Americas 8% at £159m.The restructuring in Spain remains "on track"."While mindful of our strong second half last year, we currently expect adjusted profit before tax for the full year to be in the top half of market expectations," chief executive Angela Ahrendts said.During the second half, Burberry expects a 25% increase in selling space, of which about 15% is China. Underlying wholesale revenue excluding China should rise 10%.An anticipated mid single-digit percentage drop in full-year underlying licensing revenue is better than the 5-10% predicted previously, thanks to a stronger than expected performance from the global licences, especially perfumes and watches. "Although there is a strong emerging markets growth story here, which fits with one of our key themes, this looks to fully priced-in at the current rating," Jonathan Jackson at Killik Capital said."We would be inclined to wait for some weakness before buying the shares."