Burberry beats Hong Kong disruption as new strategy progresses

The luxury fashion giant reported a pro forma adjusted operating profit of £187m, down 4% at constant exchange rates, in the half-year to September 28.

Revenues rose 3% to £1.28m and comparable store sales were up 4%, helped by new collections.

Burberry maintained guidance for “broadly stable top-line and adjusted operating margin, despite incremental pressure on gross margin from the disruptions in Hong Kong” and product mix.

Burberry is in the middle of the second year of a transformation plan spearheaded by chief executive Marco Gobbetti.

The retailer said efforts so far have been focused on “re-energising our brand and aligning our distribution to our new positioning in luxury fashion as well as establishing a new product offering”.

Burberry said there had been “good progress” against those objectives, and highlighted greater availability of products from designer Riccardo Tisci and the evolution of its retail and wholesale network.

In the first half, “mainline stores benefited from a meaningful proportion of new product [and] the response from consumers was very promising”.

Retail sales rose in all regions. In Asia, however, sales in Hong Kong declined by a “double-digit” number.

Gobbetti said: “We are pleased with our performance in the half, as we remain on track to deliver the first phase of our strategy. We delivered financial results in line with guidance despite the decline in Hong Kong and we confirm our outlook for full-year 2020.”