14th Oct 2014 06:29
LONDON (Alliance News) - British luxury fashion retailer Burberry Group PLC Tuesday said sales slowed in the second quarter hit by slower demand in some of its key markets, but it said revenue rose 14% on an underlying basis in the whole of the first half of the year and it now expects a smaller profit hit from currency moves than previously expected for the full financial year.
Burberry said demand in the second quarter and the first half overall, continued to be driven by double-digit sales growth in Asia Pacific and the Americas, with travelling "luxury customers", particularly from Asia, driving that growth.
"Looking ahead, while the negative impact of foreign exchange on full-year reported profit has recently reduced, this benefit will be partly offset by the more difficult external environment. This is expected to result in slight downward pressure on the retail/wholesale margin, as we continue to invest in key initiatives to drive long-term profitable growth. Our goal to realise further margin improvement over time remains unchanged," the company said in a statement.
Total revenue in the six months to September 30 came in a GBP1.1 billion, up 14% on an underlying basis, buoyed by 15% sales growth in retail revenue, and 13% growth in wholesale revenue. It said licensing revenue was down 3% on an underlying basis.
Burberry said retail sales continue to be driven by demand for its outerwear and large leather goods, such as its iconic trench coats and check-print patterned goods, while wholesale sales benefited from earlier deliveries and in-season orders in the first half.
However, the retailer said it expected more cautious demand from travel retail and European customers in the second half on the year.
Burberry said it now expects wholesale revenue at constant exchange rates to be down by a mid single-digit percentage for the current financial year to end of March 2015 with a more cautious approach from customers selling to the European consumer and in Asian travel retail markets.
It said it expects currency moves to now wipe around GBP25 million off its retail/wholesale profit for the full year, and reduce its adjusted operating margin from 17.5% to around 17.0%.
Burberry said it also expects around GBP10 million to be wiped off of its licensing revenue.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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