Like Burberry’s trenchcoat, the UK luxury group reveals very little. It barely explained its mixed performance over the past year, which ended in March, or how things were going so far this year.
What Burberry did say in its results presentation on Tuesday was that overall sales for the year were up 8 per cent to £2bn, while operating profits rose 14 per cent. Much of that was driven by Asia. Sales in China, which now makes up 13 per cent of the group total, were up a fifth. Indeed, like-for-like sales growth in China was up by double digits in the second half from a year earlier, from single-digit growth in the first half.
What we do know about margins is that underlying operating margins in retail and wholesale (which make up nearly all of the top line apart from the 6 per cent of sales from licensing) increased 70 basis points over the year. This gain has been helped by a push to higher margin retail – now 71 per cent of sales, up from just a half when chief executive Angela Ahrendts took over in 2007. Gross margins were also supported by some foreign exchange gains and inventory management. Excluding its new beauty division, inventory was up just 7 per cent in constant currency terms versus retail sales growth of 12 per cent.