Burberry 2Q Revenue Increases 7%

Outerwear, women's wear and the Burberry Icons accessories line drove.

Capital expenditure is expected to be about 50 million pounds, or $93 million, for the year.

Angela Ahrendts, Burberry's chief executive officer who took over in July, said there had been an "extraordinary" consumer response to Burberry Icons handbags across all markets.

The Burberry Icons collection was unveiled for fall to mark the 150th anniversary of the company. The line of accessories and outerwear features a mix of quilting, the brand's famed check, rivets and the Prorsum knight.

The handbag collection features exotic skins and quilted leather, along with D-ring buckles and leather-covered padlocks and rivet details. Prices range from $350 for a small bag to $2,125 for a larger one in an exotic skin.

Ahrendts said that, on the whole, performance in the first half was consistent with expectations for the full financial year.

In the first half, wholesale sales accounted for 46 percent of revenues in the period, followed by retail sales with 43 percent, with licensing income making up the remainder of revenues.

In the second quarter, however, wholesale sales decreased by 5.3 percent to 144 million pounds, or $269.9 million, from 152 million pounds, or $271.5 million, while retail sales in the same period rose 38 percent to 87 million pounds, or $163.1 million, from 63 million pounds, or $112.5 million.

Jacques-Franck Dossin of Goldman Sachs highlighted in a report Wednesday the divergent sales trend between wholesale and retail sales.

"It indicates that third parties are still skeptical on the brand's attractiveness, despite the improvement at the retail level. This seems to be driving management to further boost the retail expansion," he said.

"We fear this could result in an increase in the cost structure and could impact profitability, which could show as early as the first-half results in mid-November," his report added.

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