Burberry struts back from profit warning with overseas expansion
Burberry, the luxury fashion group, has bounced back from a shock September profit warning with forecast-beating results.
A 6 per cent rise in underlying profits to £173m for the half year to October was in contrast with September when Burberry's shares fell nearly 20 per cent after it warned of a sales slowdown.
Fears of flagging Chinese sales have not held stopped Burberry's plans to open three flagship stores in Shanghai over the coming year. A favourite with the British fashion scene, Burberry has also continued its global store roll-out, recently opening stores in Hong Kong and Chicago as well as London's Regent Street.
The chief executive, Angela Ahrendts, said Burberry would "stay in lane" and not change its plans to invest in new stores, as "steady wins the race".
In response to questions about whether companies should introduce quotas for female board members, given that she is now one of just two women among FTSE 100 chief executives, Ms Ahrendts said quotas were a "disservice" to companies and executives, arguing that jobs should go to the best person regardless of gender.
Despite what Ms Ahrendts called a "challenging" environment, Burberry's retail and wholesale business – together accounting for 90 per cent of sales – delivered 7 per cent sales growth and an 11 per cent rise in profit.
Pre-tax profits fell from £159m to £112m as the company took its perfumes in house and booked a £74m charge over the termination of the fragrance licence with the French company Interparfums. Burberry's finance director Stacey Cartwright said the perfume deal, which has led to the creation of new division, Burberry Beauty, should be earnings-positive after 2014.
Bethany Hocking, at Investec, said: "We remain long-term fans but the backdrop is tough. Christmas is crucial, and we see few near-term catalysts." Burberry shares fell 4 per cent to 1,199p.
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