Burberry's profits dip by 21% as US demand for the designer label slackens

Christopher Bailey says it has been a year of ‘transition’ in a fast-changing luxury market

The luxury group, which is known for its trenchcoats, is trying to refresh its product range (Getty)

Britain's Burberry reported a 21 per cent underlying drop in full-year pretax profit due to weak demand in the United States, underlining the challenge facing Marco Gobbetti when he takes over as chief executive in July.

The luxury group, which is known for its trenchcoats, is trying to refresh its product range, become more efficient and improve the performance of its stores, where its space delivers less sales than rivals.

In the past year Burberry has benefited from the drop in the value of the pound following the vote to leave the EU, boosting operating profits by nearly £130m.

For the full year, its adjusted pretax profit came in at £462m, in line with expectations and up 10 per cent on a reported basis but down 21 per cent when the impact of currency is stripped out.

Burberry said the currency boost would reverse this year, with current rates suggesting an adverse impact of about £30m.

Christopher Bailey, who is currently in charge of both creative and executive duties at the company, said it had been a year of “transition” in a fast-changing luxury market.

He said Mr Gobbetti would strengthen the brand and take the company to the “next level as a global luxury retail and digital business”.

Revenue for the year to the end of March fell 2 per cent on an underlying basis to £2.8bn, the company said on Thursday.

Analysts expect pretax profit to edge up to £468m for the current year.

Reuters