Burberry Group Plc (BRBY.L, BBRYF.PK) on Wednesday reported a 25% growth in profit for fiscal year 2008, helped by double-digit growth across all its regions, channels, and products. The global luxury company proposed a higher final dividend, and said it expects a 12%-13% increase its retail selling space and 15-20 new store openings in 2009.
Providing its preliminary results for the year ended March 31, 2008, Burberry reported that pre-tax profit jumped 25% to GBP 195.7 million from GBP 156.3 million in the year ended March 31, 2007.
Profit attributable from continuing operations increased to GBP 135.2 million from GBP 110.2 million a year ago for the London, U.K.-based firm. Earnings per share for 2008 rose 23% to 30.5 pence from 24.7 pence last year.
The recent year included a GBP 19.6 million Project Atlas cost and a GBP 15.1 million in net gain for relocation of headquarters, while last year included a GBP 21.6 million Project Atlas cost and GBP 6.5 million Treorchy closure costs.
Excluding these items, Burberry's adjusted profit attributable for 2008 increased to GBP 140 million from GBP 130 million, whereas adjusted earnings per share rose 9% to 31.6 pence from 29.1 pence in 2007.
Annual revenue increased 17% to GBP 995.4 million from GBP 850.3 million in the prior year. On an underlying basis, calculated at constant exchange rates, revenue grew by 18% year-over-year.
Segment-wise, by channel of distribution, retail sales contributed 49% of total revenue. Year-over-year retail sales rose 18%, or 20% on an underlying basis, reaching GBP 484.4 million. Comparable store sales grew by 8%, helped by successful product innovation, more frequent flow of new goods, and replenishment. Wholesale revenue, which generated 43% of total sales in 2008, grew by 20%, on both underlying and reported basis, to reach GBP 426.2 million. Sales in Europe, North America, and the emerging markets had the strongest growth in wholesale revenue.
Region-wise, revenue growth in Europe was the strongest, rising 27% on reported basis, or 26% on underlying basis, to GBP 291.8 million. Italy and Germany were among the best performing markets in this region, Burberry noted. Revenue growth in the Americas increased 19%, or 26% on underlying basis, to reach GBP 234.8 million. Underlying growth in the retail channel was more than 20%, accounting for two-thirds of Americas' revenue. Revenue growth in the Asia Pacific region grew 13%, or 17% on an underlying basis. In Korea, Burberry noted that the brand distribution stood refined. Luxury handbags sales accounted for 40% of handbag sales, which is way up from 17% last year.
By category of products, Burberry's non-apparel grew the fastest with year-over-year revenue growth of 28%, or 39% on underlying basis, contributing 32% of sales. Womenswear, contributing 38% of sales, recorded an underlying revenue growth of 14%, driven by Prorsum, seasonless, and fashion outerwear.
During the year, Burberry opened 20 mainline stores, 49 concessions stores, and 10 franchise stores in the Emerging Markets.
Operating profit for the luxury brand firm rose 28%, or 32% underlying, to GBP 201.7 million from GBP 157 million last year. Adjusted operating profit, including licensing, was up 11%, or 14% underlying, to GBP 206.2 million. Operating margin grew by 30 basis points to 14.9%.
Commenting on the results, Angela Ahrendts, chief executive officer, said, "Burberry's 18% revenue growth and 14% profit increase demonstrate the robustness of our global luxury business in these challenging times, with consistent performance across our regions, channels and products."
Additionally, Burberry said it proposes to pay a higher final dividend at 8.65 pence per share, which will amount to GBP 37.4 million. Once approved by shareholders, the dividend will be payable on July 31, 2008, to shareholders on record at the close of business on July 4, 2008.
Looking ahead to fiscal year 2009, Burberry expects average selling space in its Retail segment to rise by 12%-13%. The company plans to open about 15-20 stores in conjunction with its franchisees, in locations including South Africa and India.
Further, based upon orders received till date, the firm sees a 10% underlying rise in Wholesale revenue in the six months to September 2008. Licensing revenues is still seen to be broadly flat, on an underlying basis, for the year, 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 company expects capital expenditure to be significantly higher at GBP 90 million-GBP 95 million, which includes a GBP 20 million-GBP 25 million costs of fitting out the new global headquarters and showrooms.
BRBY.L is currently trading on the LSE at 508.00 pence, up 1.00 pence, or 0.20%, with a volume of 615,292 shares.
BBRYF.PK last traded on Friday to close at $9.65.
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