Burberry is going out of fashion in the City

Shares are down following sliding profits

Cara Delevingne and Kate Moss for My Burberry fragrance (Dan Medhurst) (Dan Medhurst)

I hear Burberry’s trademark £1,000 trench coats are selling well.

Yes, the British-made trench coats and cashmere scarves were among its best-selling products last year – yet life doesn’t look so rosy at the moment for the fashion retailer.

What’s the problem?

Its shares fell heavily after the brand, led by former design chief Christopher Bailey, saw profits dented by adverse foreign exchange changes in the year to 31 March. The company, whose fans include supermodel Naomi Campbell, said currency movements are also expected to hit its 2016 profits. It has been hit by the strong pound because it makes a huge chunk of its sales overseas.

Ouch...

Not only this but the group joins a string of luxury rivals, such as Prada and LVMH, in being affected by protests in Hong Kong and a fall in spend from the Chinese. Pre-tax profit at the firm was largely static at £444.6m.

What did Bailey say?

"At this early stage of the year, we are seeing increased uncertainty in some markets. Against this background, we will continue to manage our business dynamically, capitalising on the significant opportunities we have by channel, region and product to create long-term shareholder value."

What about the City?

Mike van Dulken, head of research at Accendo Markets, said the City’s attitude to Burberry had soured "as investors deem unfashionable the first set of full-year results from Christopher Bailey since he replaced the iconic Angela Ahrendts who jumped ship for Apple".