Currency losses knocked fashion brand Burberry from its pedestal of profit growth today.
Burberry’s half-year reported profit came in at £142 million — 10% below last year — having lost £31 million on currency moves.
The luxury group, which picked David and Victoria Beckham’s son Romeo for its Christmas ad campaign, previously warned of the foreign exchange hit and said on an underlying basis profit rose 6% to £152m with sales up 14% to £1.1 billion - in line with City expectations. It added that although the currency issues took £75 million from sales it doesn’t expect any further impact in the second half if exchange rates remain at current levels.
Christopher Bailey, chief creative and chief executive, said: “Looking ahead, in a more difficult external environment, we continue to focus on the things that we can control.”
Overall retail sales grew 10% compared to the previous year, accounting for 68% of group revenue.
In China, where a government crackdown on gift giving has hurt the luxury goods sector, it admitted sales had “slowed” but said sales growth remained in double digits. Underlying group wholesale revenue rose 5%.
Operating margin was hit by a one-off cost relating to last year’s Brit Rhythm fragrance launch and reported margin was weaker at 11%.
Bailey said the group was focused on maintaining its digital strength and recent new online partnerships include China’s Tmall.com and a promotion through Twitter.
It increased its dividend by 10% and promised it will gradually move to a 50% dividend pay-out ratio over the next three years – up from 40% - as a “signal of confidence” for future performance.
