For the quarter ending September 30, Burberry sales were up 19 percent in local currencies and recorded gains in all of the brand’s historic lines, compared to an overall drop of 4.4 percent in the division to reach $104.0m.
For 2010, the company plans the launch of a Burberry cosmetics range, and hopes that this, in addition to a new sports fragrance and new women’s scent for Lanvin, Van Cleef & Arpels and Paul Smith, will help drive sales in Europe in the coming year.
Highlights for 2010 in the US, which makes up only a fraction of the company’s sales, include a cosmetics range for the bebe brand as well as a second fragrance.
According to the company’s CEO Jean Madar, the success of the bebe fragrance as well as the introduction of Banana Republic’s Republic of Women and Republic of Men, helped decrease the sales decline in the third quarter.
Sales in the US dropped 8 percent to $13.5m during the quarter whereas in the second quarter of 2009 sales dropped over 35 percent.
Sales down but profit up
Overall sales for the European and US divisions combined were down 5 percent to $117.5m, but this did not stop profit from rising during the quarter.
Gross margin as a percentage of sales was 57 in comparison to 55 percent and operating income rose 23 percent from $11.3m to $13.9m.
According to the company’s CFO Russell Greenberg the third quarter gross margin benefited from cash flow hedging activities that the company entered into in late 2008 to take advantage of a strong US dollar.
In addition, Greenberg said the selling, general and administrative expenses remained constant as a percentage of sales between third quarter 2008 and the third quarter 2009.
“Our bottom line also benefited from a pre-tax foreign currency gain of $0.9m for the third quarter relating to our hedging activities,” he added.
Off the back of the nine month results the company is raising its guidance for the full year 2009.
“Barring unforeseen developments and assuming the dollar remains at current levels, we now look for net sales to come in at approximately $400m,” said Greenberg.