Burberry fashions record half year profits

Burberry touted a strong performance in Asia and barnstorming sales of its leather aviator jackets for driving record half-year profits yesterday.

The luxury group also hailed the contribution of a 26 per cent surge in non-apparel sales, with the star performer being its leather handbags, to pre-tax profits surging by 49 per cent to £118m.

Angela Ahrendts, the chief executive of Burberry, said: "The continued focus on the brand, ongoing investment in our digital, IT and retail infrastructure, especially in China, and a disciplined approach to driving growth underpin our confidence in delivering long-term sustainable returns."

Total revenues at Burberry, which has retail, wholesale and licensing divisions, rocketed by 21 per cent to £641m over the six months to 30 September.

Ms Ahrendts, who has been feted for her turnaround at Burberry, cited an impressive performance in China where it acquired in September 43 of the 50 stores that were previously operated by its franchise partners. Sales at the new company-owned stores jumped by 25 per cent in the half-year. Burberry expects to transfer over the seven remaining franchise stores over the coming months.

Sales across its emerging markets division accounted for 13 per cent of total sales in the first half, up from 11 per cent last year, with Turkey also making a strong contribution.

Ms Ahrendts said Burberry would continue to invest in new markets from India and China to the Middle East to deliver "long-term sustainable growth". The luxury brand also boasted double-digit underlying sales growth in Europe – where it has 87 shops including concessions – with the UK, Italy and France "among the best performing markets".

In the UK, which accounts for 6 per cent to 7 per cent of its global sales, Ms Ms Ahrendts said: "We are absolutely thrilled that it [UK] is one of the strongest markets in the world for us. We have a loyal local customer base and London is one of the most visited places in the world today. We get Russian, Middle Eastern tourists coming in... and we now get the Chinese customers coming in."

A key driver of the uplift in Burberry's retail and wholesale profits to £87m was a 670 basis point rise in its gross margin.

Ms Ahrendts said that Burberry's aviator jackets had gone down a storm with customers. She said: "The aviator went down the runway [catwalk] last autumn in about 10 different iterations and it is very difficult to find one in one of our stores these days."

She also played down the prospect of Burberry following other retailers in rising prices next year, in the wake of cost pressures in the supply chain from spikes in the price of cotton and record freight charges.

Ms Ahrendts said that through better negotiation with suppliers, aided by its increased volumes, it would be able to "mitigate all these to a large extent".

Burberry raised its interim dividend by a massive 43 per cent to 5p.

High street up and downs

Until the summer sun started to fade, most of the high street had enjoyed a better than expected year of trading. However, in recent months, signs of just how tough life has become for some of the UK's most well-known chains have emerged. At the troubled end of the high street, the beleaguered sportswear chain JJB continues to suffer falling margins resulting from hefty discounting.

Even among some of the country's most profitable retailers, such as Next, underlying retail sales have gone into reverse. Yesterday, French Connection provided further evidence of tough trading with like-for-like sales at its UK and European retail division down by 7.7 per cent for the 15 weeks to 13 November.

But the City was buoyed by French Connection's wholesale revenues being "well ahead of the level last year", prompting Numis analysts to substantially mark up their pre-tax profit forecast to £5.3m for this financial year. Elsewhere, JD Sports Fashion continued to shine with sales growth of 2.7 per cent for the four weeks up to 28 August.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Mortgage Administrator

£20000 - £25000 per annum: Recruitment Genius: We are a vibrant and establishe...

Recruitment Genius: Payments Advisor

£15000 - £20000 per annum: Recruitment Genius: An experienced Repayments Advis...

Recruitment Genius: Investment Analyst

£25000 - £30000 per annum: Recruitment Genius: This leading provider of financ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Are you looking to take your ...

Day In a Page

Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent
Markus Persson: If being that rich is so bad, why not just give it all away?

That's a bit rich

The billionaire inventor of computer game Minecraft says he is bored, lonely and isolated by his vast wealth. If it’s that bad, says Simon Kelner, why not just give it all away?
Euro 2016: Chris Coleman on course to end half a century of hurt for Wales

Coleman on course to end half a century of hurt for Wales

Wales last qualified for major tournament in 1958 but after several near misses the current crop can book place at Euro 2016 and end all the indifference
Rugby World Cup 2015: The tournament's forgotten XV

Forgotten XV of the rugby World Cup

Now the squads are out, Chris Hewett picks a side of stars who missed the cut
A groundbreaking study of 'Britain's Atlantis' long buried at the bottom of the North Sea could revolutionise how we see our prehistoric past

Britain's Atlantis

Scientific study beneath North Sea could revolutionise how we see the past
The Queen has 'done and said nothing that anybody will remember,' says Starkey

The Queen has 'done and said nothing that anybody will remember'

David Starkey's assessment
Oliver Sacks said his life has been 'an enormous privilege and adventure'

'An enormous privilege and adventure'

Oliver Sacks writing about his life
'Gibraltar is British, and it is going to stay British forever'

'Gibraltar is British, and it is going to stay British forever'

The Rock's Chief Minister hits back at Spanish government's 'lies'
Britain is still addicted to 'dirty coal'

Britain still addicted to 'dirty' coal

Biggest energy suppliers are more dependent on fossil fuel than a decade ago
Orthorexia nervosa: How becoming obsessed with healthy eating can lead to malnutrition

Orthorexia nervosa

How becoming obsessed with healthy eating can lead to malnutrition
Lady Chatterley is not obscene, says TV director

Lady Chatterley’s Lover

Director Jed Mercurio on why DH Lawrence's novel 'is not an obscene story'
Farmers in tropical forests are training ants to kill off bigger pests

Set a pest to catch a pest

Farmers in tropical forests are training ants to kill off bigger pests