Burberry CEO Angela Ahrendts, who is set to depart the British-based retailer for Apple this spring, will be leaving on a high note. On Thursday, Burberry posted results for the first half of the year, breaking sales of more than £1 billion (about $1.5 billion) for the first time, up 17% from the same period a year prior. Sales for the full year increased 7.4% to £2 billion.
Perhaps Ahrendts' biggest accomplishment at Burberry was transforming its business from a wholesale (i.e., one that sells most of its products through third parties, like department stores) to a retail one (in which Burberry sells most of its own goods to consumers through its own channels, including Burberry stores and its website). Retail now accounts for exactly two-thirds of Burberry's overall business, up two percentage points from the first half of last year. Meanwhile, wholesale sales also continued to grow.
Sales in one of Burberry's most important markets, China, proved stronger than expected, up 20% over last year, though still weaker than the 30% growth seen between 2011 and 2012. The company now has 71 stores in 36 cities across mainland China, and say that visitors to its website in China jumped 70 percent. China accounts for 14% of all retail and wholesale revenue.
Burberry is also continuing to grow aggressively, albeit on a small scale, in Japan, where it will take over its own apparel license in 2015. The company now operates four stores in the country which have seen double-digit sales growth in the first half.
Ahrendts has long said that she's focused more on profit growth than revenue growth, but net profit declined 3.5% to £254 million ($388 million) in the first half, largely because of investments being made in Burberry's beauty business, which is expected to generate wholesale revenue of about £140 million (about $225 million) and incremental retail/wholesale profit of around £10 million for full-year 2014.
Burberry is planning to close 15 stores and open 25 more next year, most of which will be in the emerging luxury markets of China and Latin America.