Burberry predicts swift recovery

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The Independent Online

Burberry predicted yesterday that it will recover from its sudden fall into negative trading in its retail business within the next four months.

The luxury goods and designer clothing brand had warned that war in Iraq and the outbreak of Sars in Asia had hit trade. The company is partly reliant on business from travellers, which was reduced as a result of these events.

Reporting full-year results, Burberry said it had suffered "single digit" sales declines in March and April compared with last year. But it predicted a swift recovery from these "exceptional circumstances".

Mike Metcalf, the chief financial officer, said: "It's disappointing but we're assuming some improvement over the next three or four months ... [though] we're not talking about a return to boom times." He said the company would see positive sales within four months, barring any more "incidents", and return to growth in the "mid-teens" in the medium term.

He said the company had no indication its majority shareholder, GUS, which listed 20 per cent of Burberry a year-and-a-half ago, was going to sell down any of its remaining interest.

For the year ended 31 March, total revenues were up 19 per cent at £593.6m, while pre-tax profits grew to £119m, from £85m previously. Burberry said the performance was "very strong".

During the period, high-margin accessories as a proportion of sales climbed from 25 to 29 per cent. Group-wide, the gross margin increased to 56 per cent from 50 per cent. Burberry shares closed down 6 per cent at 251p on worries about the trading outlook.

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