Burberry like-for-likes up 12% but warns exchange rates will hit profits

The retailer, which posted a total sales rise of 19% to £1.3bn in the six months to March 31, said the impact of exchange rates next year would be “material” if they remain at current levels and would wipe £30m off the reported profit in the financial year just ended, if it were rebased.

Burberry chief executive Angela Ahrendts said: “We are pleased with our second half performance underpinned by the planned increase in investment in offline and online retail, innovative customer service and marketing.”

“While current exchange rates are a material headwind in what remains an uncertain macro environment, our continued global brand momentum provides an excellent foundation for the future.”

Burberry said that footfall to its stores remained “soft” but online traffic grew, with conversion increasing via both channels.

All five of Burberry’s product divisions achieved double digit growth over the period but core outerwear and large leather goods accounted for nearly half of the growth.

Accessories is still Burberry’s largest product area with underlying sales up 15% to £455m over the half. Menswear also had a stellar performance with underlying sales up 13% to £285m.

The Asia Pacific region remained its largest with underlying sales rising 19% led by Greater China and Korea, however the Americas was Burberry’s best performing market over the half with underlying sales up 27% to £320m.

Europe and the rest of the world sales jumped 21% to £425m.

Wholesale advanced 11% to £240m, excluding its beauty business, which hit £93m.

Ahrendts said: “With the management transition well underway, Burberry begins a new year with Beauty firmly established as the fifth product division and investment in flagship markets, such as Shanghai, further increasing the brand’s appeal to the core luxury customer at home and when travelling.”

Burberry expects to open 20 to 25 stores next year and to close between 15 to 20. Openings will be biased to flagship markets and travel retail, particularly in China and the Middle East.