Burberry1.08 Billion To Take Over 50 Stores In Walter
According to foreign reports, Britain's largest
Luxury goods
Retailer Burberry group (Burberry) will take over 70 million Burberry ($108 million) to take over Burberry franchise in China, which will increase the revenue of the company by 10%.
Burberry will acquire 50 stores and franchise partners Kwok Hang Holdings related assets.
As of March 2012, the acquisition will bring Burberry operating profit of 20 million.
Dennis Webb, of Evolution Securities, said, "from an economic point of view, the acquisition is very wise."
By the year 2012, Burberry's EPS will rise by 6%.
Luxury goods
The company is looking for opportunities to expand its market in China.
According to the study of Capgemini and Merrill Lynch, the number of millionaires in China increased by 31% last year.
The Chinese Academy of Social Sciences said in May that in the next 5 years, China's
Luxury goods
The market will be worth 14 billion 600 million US dollars, ranking first in the world.
At 4:30 p.m. in London time, Burberry shares rose 9 pence, or 1.1%, to 799.5 pence.
Burberry shares rose 33% this year, and the company's market value reached 3 billion 500 million.
"Very attractive"
"From the strategic and financial point of view, the acquisition is very attractive, enabling us to control this developing luxury market."
Angela Alenz, chief executive of Burberry, said, "we see opportunities for further improvement in sales and profits."
By the end of December 2009, the retail sales of China's franchise stores totaled 75 million pounds, generating 14 million pounds for local franchising stores.
If Burberry takes over these stores in the fiscal year ending March 2010, its retail revenue will account for 63% of the total sales volume; if not, the retail industry will account for 58%.
Burberry disclosed that the total assets acquired were worth 30 million pounds.
Excluding cost, its operating profit in the 2010 fiscal year was 219 million 900 thousand.
All cash pactions will be completed by the end of 2010.
In accordance with the new agreement, Burberry will take over the management of the store, and the existing franchisor has a 15% share.
Burberry directly operates 13 Hongkong stores, 1 Macao stores and 19 Taiwan stores, and plans to open 10 stores in China this year.
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