The Business Times

Burberry says markets getting tougher as H1 sales rise

Published Tue, Oct 14, 2014 · 07:44 AM

[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.

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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