Burberry results ease market fears

Fashion firm Burberry soothed fears about the luxury goods market today as it reported better-than-expected half-year figures.

Burberry results ease market fears

UK fashion firm Burberry soothed fears about the luxury goods market today as it reported better-than-expected half-year figures.

The group – known for its red, black and camel check – posted a 6% increase in underlying pre-tax profits to £173m (€216m), thanks to high-spending luxury consumers offsetting a drop in footfall across its stores.

Burberry recently spooked investors after warning over profits in September amid concerns that China’s demand for its luxury goods was in decline.

The group confirmed that like-for-like sales growth slowed in China over the second quarter, but remained positive, giving it “mid-teens” growth over the six months to September 30.

However, Burberry’s decision to start making its own perfumes and cosmetics hit profits on a non-adjusted basis.

Bottom-line figures fell from £158.7m (€198.2m) to £111.9m (€139.75m) in the first half as it paid £74m (€92.4m) as part of a previously announced €181m charge to end a licence agreement with Interparfums.

Despite the initial financial blow, Burberry chief executive Angela Ahrendts said the decision to bring perfumes and beauty in-house was a “significant brand and business opportunity” and will boost profits over time.

It is creating a new division for perfumes and cosmetics, called Burberry Beauty.

Kate Calvert, retail analyst at Seymour Pierce, said: “This is a reassuring set of results and will help rebuild sentiment towards the shares after its unscheduled trading update in September.”

But she said the group’s performance over the all-important Christmas season would be key for its full-year performance.

Burberry lost 20% of its stock market value in one day after September’s profit alert, but more reassuring details on its underlying performance since then has helped shares recover, with the stock opening higher today.

Sales figures, which were already announced last month, showed underlying retail sales rising by 10% to £577m (€720.6m) in the first half as higher quality sales, such as its Prorsum range, offset a drop in customer numbers.

It said the UK, which accounts for 40% of European retail sales, saw a slowdown in London during the second quarter amid disruption from the Olympics.

more courts articles

Man (25) in court charged with murdering his father and attempted murder of mother Man (25) in court charged with murdering his father and attempted murder of mother
Man appears in court charged with false imprisonment of woman in van Man appears in court charged with false imprisonment of woman in van
Man in court over alleged false imprisonment of woman Man in court over alleged false imprisonment of woman

More in this section

FILE PHOTO The Competition and Consumer Protection Commission has cleared the purchase of Goodbody Stockbrokers by AIB END Goodbody Stockbrokers fined over €1.2m by Central Bank over rules breaches
Nottingham City Centre Stock Irish staff at the Body Shop wait for wages as retailer shuts stores in the Republic
Ryanair comments on Norwegian Ryanair boss O'Leary's spat with Transport Minister over Dublin Airport escalates
IE logo
Devices


UNLIMITED ACCESS TO THE IRISH EXAMINER FOR TEAMS AND ORGANISATIONS
FIND OUT MORE

The Business Hub
Newsletter

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
ie logo
Puzzles Logo

Play digital puzzles like crosswords, sudoku and a variety of word games including the popular Word Wheel

Lunchtime News
Newsletter

Keep up with the stories of the day with our lunchtime news wrap.

Sign up
Cookie Policy Privacy Policy Brand Safety FAQ Help Contact Us Terms and Conditions

© Examiner Echo Group Limited