[/caption]Burberry has announced today that they are buying out all the stores and assets in China which are now operated by franchisees.
According to a statement release by the UK Company, this is in line with the long term strategy of the company to have a consistent branding all around the world.
The transaction will be approximately $108m in cash and it is estimated that this will add around $30m to the group operating profit during the financial year ending 2011/2012. This acquisition will allow Burberry to take control of 50 stores in 30 cities dispersed all over mainland China.
According to Angela Ahrendts, Chief Executive Officer, this acquisition by Burberry will allow the company to “leverage their brand and business strategies in this high growth luxury region”.
The company aims at increasing their sales by taking advantage of their high brand awareness in the region. New stores will be opened (10 stores are expected to be opened in this current financial year) and also greater focus will be placed on digital marketing in order to help the company accomplish their objectives.
This announcement caused Burberry shares to rise by 4.7% to reach a record high, Bloomberg Businessweek reported. On Tuesday, Burberry released its first quarter trading update and figures showed that revenue were up by 27% with retail sales up 21% and wholesale sales up 46%.
In the same statement the CEO already made clear of the intentions of Burberry by stating that “our robust financial position together reinforce our confidence to increase investment for the future, while continuing to enhance the brand”.
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