20th May 2015 11:43
LONDON (Alliance News) - Burberry Group PLC's shares took a hit Wednesday after it lowered its retail and wholesale profit guidance for its current financial year due to movements in foreign exchange rates and also cautioned that it is seeing "increased uncertainty" in some markets.
Shares in Burberry were down 5.4% at 1,710.00 pence Wednesday afternoon, making it the biggest faller in the FTSE 100 index.
The fashion retailer said that if exchange rates remain where they are, it expects retail and wholesale profit in the current financial year to be around GBP10 million higher than at the prevalent exchange rates in its last year. That is GBP40 million lower than the guidance it gave in its trading update in April. It left all its other guidance unchanged, including the expectation that licensing revenue will fall 40% at constant exchange rates due to the expiry of Japanese licences.
Burberry also said it expects its adjusted pretax profit at constant exchange rates to be more weighted to the second half in the current year.
"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," Chief Executive Christopher Bailey said in a statement.
It reported a pretax profit of GBP445 million for the year ending March 31, up from GBP444 million the year before, as strong demand for its heritage trench coats, cashmere scarves and ponchos helped drive revenue up 8% to GBP2.5 billion from GBP2.3 billion.
Its closely-watched adjusted pretax profit, which excludes amortisation of fragrance and beauty licence intangibles and a put option liability finance charge or income, fell to GBP455.8 million, from GBP461.0 million, due to a GBP38 million hit caused by the strength of sterling. The figure would have risen 7% if exchange rates had remained the same.
Retail and wholesale adjusted operating profit rose 1% to GBP399.2 million, from GBP393.5 million, as revenue grew 11% in its retail business and 3% in wholesale. Adjusted operating profit in its licensing business fell to GBP56.0 million from GBP66.8 million, as revenue declined 14%.
Underlying revenue in menswear increased 10%, driven by sales in scarves and shoes, while underlying sales in beauty grew 26% following the successful launch of its My Burberry fragrance.
Burberry will pay a dividend of 35.2 pence, up 10% on the 32p paid the year before.
"With the external environment becoming more uncertain in some markets since the start of the year, in FY 2016 we will continue to tightly control costs, invest selectively to drive growth while embedding more productive and efficient processes throughout the business. Key investments will include stores in flagship markets, technology and continued digital enhancements," the company said.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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