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Burberry says markets getting tougher as H1 sales rise

Tuesday, October 14, 2014 - 15:44

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British luxury brand Burberry posted a 14 per cent rise in total first half revenue though it cautioned the external environment was becoming more difficult, partly offsetting reduced currency headwinds. - PHOTO: BURBERRY

[London] British luxury brand Burberry posted a 14 per cent rise in total first half revenue though it cautioned the external environment was becoming more difficult, partly offsetting reduced currency headwinds.

The 158-year-old seller of raincoats and leather goods, known for its camel, red and black check pattern, said on Tuesday it made revenue of 1.1 billion pounds (US$1.77 billion) dollar) in the six months to Sept 30, reflecting a strong performance across all regions and continued digital growth.

The outcome was driven by retail sales growing 15 per cent to 748 million pounds - bang in line with analysts' average forecast, with comparable sales growth of 10 per cent.

Wholesale revenue rose 13 per cent to 317 million pounds.

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However, for its second half to March 31 Burberry expects wholesale revenue at constant exchange rates to be down by a"mid single-digit percentage". That reflects a more cautious approach from customers selling to the European consumer and in Asian travel retail markets.

The luxury goods industry is currently facing a testing time, with the Ukraine crisis hitting demand in Russia and anti-government demonstrations in Hong Kong adding to concerns about a slowdown in China, where a government crackdown on corrupt gift giving has hurt luxury goods sales.

Burberry said that if exchange rates remain at current levels, the full impact on reported retail/wholesale profit in the 2014-2015 year will still be material.

As an indication, it said rebasing 2013-2014 retail/wholesale profit for current effective exchange rates would have reduced reported profit by about 25 million pounds. Burberry had previously flagged a potential hit of about 55 million pounds.

Shares in Burberry, which have lost 4 per cent of their value over the last month, closed Monday at 1,469 pence, valuing the business at 6.6 billion pounds. REUTERS

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