UK: Burberry H1 profit up 3%, warns of difficult H2
Profit at Burberry Group Plc has crept up by 3% in the first six months of its current financial year, helped by revenue growth in both its retail and wholesale channels - but the British luxury goods brand warned that trading has become more difficult since start of its second half.
For the six months to 30 September, underlying operating profit rose to GBP98.4m (US$147.9m) from GBP95.1m in the same period last year.
Underlying revenue jumped 13% to GBP539m from GBP449.1m, helped by double-digit growth in all regions, except Spain, the company said. Sales of non-apparel rose 20% to account for 31% of total revenue.
But Burberry cautioned that in line with other luxury companies, "trading has become more difficult since start of second half, particularly in the US."
If these second-half trends continue into the peak Christmas and holiday season, underlying operating profit for the year will be in the mid to lower half of market forecasts.
"The fundamentals of Burberry remain strong, despite the current very challenging environment," said chief executive officer Angela Ahrendts.
She added: "With our supply chain and IT investments in their final phases, we are now in a position to drive significant efficiencies in the near term.
"These benefits, along with continued investment in the business, our seasoned management team, strong brand perception and proven strategies underpin our confidence in the future long-term growth of Burberry."
The group, which is for famous for its camel, red and black check, said retail revenue for the first half was up 14%, with same-store sales growth of 3.
Wholesale revenue rose 15%, helped by a strong performance in the Americas, Europe and emerging markets. However, licensing revenues fell 3%.
Burberry said it has identified savings of GBP15m to GBP20m next year and that "further significant savings" were under review.
Investments in its supply chain, IT and infrastructure are partly responsible for these savings, it said.
Separately, the company also revealed two joint ventures with long-standing partners - the first in the Middle East and the second for non-apparel in Japan - both of which are intended to accelerate its growth in these key regions.
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