Burberry Net Climbs 14.4% In Difficult First Half

Neiman Marcus Shoes
Burberry Nadine camouflage fringe bootie in dark green & ochre camo print, $1,095.
Courtesy of Neiman Marcus.

Profit at Burberry Group climbed 14.4 percent to 119.5 million pounds, or $184 million, in the six months to Sept. 30 in a period where overall revenue, as reported, was broadly flat.

In the six months, revenue climbed 0.5 percent to 1.11 billion pounds, or $1.7 billion, on a reported basis. That figure was 5 percent below analysts’ projections.

Christopher Bailey, Burberry’s chief executive and chief creative officer, said Thursday that during the six months, “the external environment became more challenging in key markets over the period.” He added that the brand had entered the second half  “mindful of this backdrop, but confident in our strongest-ever festive plans and emphasis on productivity and efficiency.”

In the full year, net new retail space is expected to contribute low single-digit percentage growth to total retail revenue, while wholesale revenue at constant exchange rates in the six months to March 31 will be broadly flat against last year.

Burberry also said that if exchange rates remain at current levels, there will be no material benefit to full-year profit figures, compared to last year. As of last month, the company had expected to reap about 10 million pounds, or $15.2 million, from currency fluctuations.

On Oct. 15, the brand reported that first-half retail sales grew 3.5 percent to 774 million pounds, or $1.19 billion. Stripping out the boost from exchange rates, they grew by 2 percent, compared with 8 percent in the first quarter.

In the six months, adjusted profit before tax was broadly flat at 152.9 million pounds, or $235.5 million. On an underlying basis, it climbed 3 percent. Reported profit before tax was 8.3 percent higher than the previous year.

The brand said that adjusted measures excluded items such as charges in relation to the brand’s beauty business and finance income related to the brand’s Chinese business.

As reported last month, there was a surprise 4 percent decline in same-store sales in the second quarter, which compared with analysts’ projections of 5 percent growth.

Sales of women’s wear were flat in the half, while accessories grew by 2 percent. Men’s wear sales were also flat, and dipped 1 percent on an underlying basis. Top performers included heritage trenchcoats, ponchos, scarves and the Banner handbag.

In the six months, beauty sales were up 4 percent, while the children’s category grew 10 percent on a reported basis, and 8 percent underlying. Dollar figures have been converted from British pounds at average exchange rates for the six months to Sept. 30.