Burberry silences China critics with profits leap
Burberry posted a leap in half-year profits, playing down fears over an economic slowdown in China by emphasising the global reach of the luxury brand.
The company's shares have been buffeted by concerns over China in recent months but Burberry stressed the country accounts for only 10 per cent of its global revenues and that Shanghai and Beijing represent just two of its 25 flagship markets globally. Angela Ahrendts, the chief executive of Burberry, said: "It [China] is a nice and strong market. But it is not a market that Burberry is overly dependent on. There are 25 Londons around the world and that is where Burberry is focused."
Indeed, China, where Burberry acquired its 50 franchise stores in September 2010, delivered a 30 per cent jump in like-for-like sales.
Shares in Burberry fell 74p, or 5 per cent, to 1,347p yesterday, although they are up nearly 20 per cent this year.
For the six months to 30 September, Burberry posted a 26 per cent rise in underlying profits to £162m, on total revenues up 29 per cent to £830m.
The profit rise was driven by an increase in margins and double-digit revenue growth across all its regions, divisions and product categories.
Its retail gross margin rose by 2.4 per cent to 66.7 per cent. Ms Ahrendts also cited strong performances in London, Paris, New York, Dubai and Hong Kong. But Asia-Pacific was the star, growing retail and wholesale revenues by 51 per cent to £265.3m.
Since 2010, Burberry has doubled its workforce at its factory in Castleford, Yorkshire, which makes most of the gaberdine trenchcoats for its new Burberry Bespoke website. The site provides 12 million options, including different studs, cuffs and collars.
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