Luxury handbags, women's runway apparel and outerwear continued to perform well, further increasing the average unit retail price in our mainline stores.
Comparable store sales growth was particularly pleasing in the US, Italy and other parts of Continental Europe, including our Spanish womenswear concessions.
In the first half, there was a 12% increase in average selling space year-on-year. The net addition of 11 stores, 13 concessions and two outlets in the period included six in the US, four in Italy and 10 throughout Asia.
Wholesale revenue, which accounted for 46% of total sales in the first half, increased by 16% on an underlying basis (14% reported), consistent with our expectations.
This performance reflects the strength of the autumn/winter collection which was shipped to wholesale customers predominantly during the second quarter.
As in retail, revenue growth was driven by the appeal of the product, by the more frequent flow of product to customers with the new market calendar and by basic replenishment.
While Spain remained down year-on-year, the US showed particular strength with growth in key accounts of over 40%. Europe (excluding Spain) and emerging markets also performed well.
The implementation of Project Atlas continued successfully in the first half, with further progress in both improving business processes and in installing new IT systems. To accommodate the strong growth in our business, we have increased our investment in both areas.
To mitigate the risks of implementation at a time when Burberry is growing so strongly, we have delayed certain elements of the IT roll-out into the third quarter.
This re-phasing has led to some additional spend, both in operating costs within the business and in IT resources. As a result of the latter, overall costs relating to Atlas in the current financial year are now expected to be approximately £19m (previously £15m).
This still brings the total project cost to just over £50m in the three year period. The programme remains on track to deliver the targeted £20m tangible benefits to profit in 2007/8.
We have also increased our investment in improving business processes around the group, including strengthening our global supply chain team, adding warehouse capacity to handle the strong growth in volume and upgrading our corporate functions.
marketing@alchempro.com
