Burberry predicts annual earnings ahead of hopes
Fashion house Burberry today said it expected annual earnings to be ahead of hopes, but said its UK business had continued to suffer.
The group said it was anticipating minimum pre-tax earnings before interest and goodwill of £162m (€237m) in 2004/5.
It said total revenues in the six months to March 31 had increased by 6% at constant exchange rates while new stores helped to boost retail sales by a similar amount.
However, Burberry said its UK business, which has been suffering from the impact of the weak dollar on tourism in London, remained “soft”.
The company warned that it expected first half wholesale revenues in 2005/6 to be broadly flat against the previous year, based on orders to date for this autumn and winter.
It also forecast that licensing revenues would grow more moderately in 2005/6 than in the second half of 2004/5.
In a trading update ahead of half yearly results, chief executive Rose Marie Bravo described its performance as solid.
“Looking forward, we continue to be encouraged by the vitality of the Burberry brand and the opportunities it presents,” she said.
Burberry is two-thirds owned by Argos-to-Homebase retailer GUS. It said in January that its UK business had suffered from a lower number of United States tourists visiting London due to the strength of sterling against the greenback.
It said the so-called “chav” factor – the trend among some young soccer fans and others for wearing Burberry-check caps and clothing – also “probably had not helped” the upmarket brand’s UK performance.
However, it downplayed their impact on its business, saying the UK accounted for less than 10% of the group’s worldwide sales.
It said its fourth-quarter retail performance had been consistent with that of the third quarter.
In its US business, as a result of a muted consumer response to early spring women’s fashion styles and significant store refurbishment activity, sales growth was driven by extra store space.
Similarly, new stores and concessions drove sales growth in continental European markets, which achieved strong gains in previous year period.
In Asia, sales in Korea continued to be volatile, resulting in a small quarterly gain, although Hong Kong and south-east Asia achieved robust gains in the period.
