Burberry first-quarter beats forecasts, not seeking HK listing

PARIS Wed Jul 13, 2011 5:09am EDT

PARIS (Reuters) - Luxury group Burberry (BRBY.L) said it was not seeking a listing in Hong Kong, dismissing recent speculation such a move was afoot, as it posted fiscal first-quarter sales above forecasts.

The British maker of raincoats and leather goods, identifiable by their camel, red and black check pattern, said it did not need extra funds even though it was stepping up investment in new shops and refurbishments this year.

"There is no need to raise capital, there is no catalyst for us to be considering that (a Hong Kong listing)," Finance Director Stacey Cartwright told reporters in a conference call on Wednesday.

Luxury brand Prada last month floated successfully in Hong Kong in a move aimed at raising its profile in the region and cashing in on China's voracious appetite for luxury goods.

Burberry said it planned to open 20-25 shops this year, slightly more than last year, while refurbishing a number of flagship stores, including two in London.

Sales generated by Burberry's retail network, which contributes 66 percent of turnover, rose nearly 50 percent in its first quarter to June, a performance that puts it at the top of the luxury sector.

Cartwright said the brand had benefited from strong growth in Asia and solid trading in France and Germany.

Burberry shares rose sharply on Wednesday, having reached a fresh high last week together with other luxury stocks such as Hermes (HRMS.PA) and LVMH (LVMH.PA), driven by investors' anticipation of strong first-half results.

By 0810 GMT, Burberry shares were up 3.27 percent at 1481 pence after climbing more than 5 percent and touching a high of 1545 pence in morning trade.

In contrast, shares in French cosmetics maker L'Oreal (OREP.PA), which makes Lancome lipstick, Biotherm creams and Garnier shampoos, were down 4 percent after it posted disappointing second-quarter sales, hurt by North America and eastern Europe.

The 155-year-old Burberry group has seen its shares rise fourfold over the past two years on the back of a successful turnaround, and recurring speculation it could be acquired.

U.S. STRONG

Investors have been piling money into luxury stocks, attracted by fast-growing demand from emerging markets and luxury companies' ability to raise prices to pass on higher raw material prices without affecting demand.

Analysts said the price increase was also due to the British brand's raised expectations for its wholesale operations, bolstered by the Americas, emerging markets and travel retail.

Thanks to higher-than-planned in-season orders, Burberry said it expected wholesale revenue excluding China to increase by a high-teens percentage at constant exchange rates in the first half, up from its previous forecast of mid-teens growth.

"The U.S. has performed very strongly within that wholesale guidance number. We believe we continue to outperform versus many of our luxury peers there," Cartwright said.

Burberry added it expected a percentage gain for licensing revenue in the current year to March in the mid-single digits.

Some analysts said they did not expect to raise their earnings expectations for the year significantly on the back of the company's upbeat trading update.

"With expectations of high cost inflation in the business, we could expect only modest earnings upgrades for the current year," Citi said in a note.

Overall, Burberry revenue rose 34 percent on a comparable basis to 367 million pounds ($588 million), above expectations for 345 million.

($1 = 0.624 British Pounds)

(Editing by Christian Plumb, Jon Loades-Carter and David Hulmes)