15th Oct 2015 06:15
LONDON (Alliance News) - Burberry Group PLC on Thursday said its second quarter was hit by a challenging environment for the luxury goods industry, particularly in China, and said it will take further cost-control actions in the second half to minimise the impact on its profit for the full year.
Still, the group said it expects its adjusted pretax profit for the full year to be in line with analyst expectations, despite the tough environment.
Burberry said its retail revenue was up 2% on an underlying basis in the first half to the end of September to GBP774.0 million, with like-for-like sales growth of 1.0% in the period. A strong performance for the group in Europe, the Middle East, India and Africa, driven by travelling luxury customers in Europe, was offset by a mid-single digit percentage decline in sales in Asia Pacific, with a "further deceleration" in Hong Kong.
Wholesale revenue for the retailer was down 3% on an underlying basis in the half to GBP305.0 million, while licensing revenue fell 18%, both in line with its expectations.
For the full-year, Burberry expects its adjusted pretax profit to be in line with analyst expectations, with a return to mid-single-digit percentage growth in like-for-like sales in the second half, boosted by cost cuts, a reduction in performance-related pay, and an anticipated exchange rate translation benefit.
"The external environment became more challenging during the half, affecting luxury consumer demand in some of our key markets. In response, we have intensified our focus on driving sales and productivity, while taking swift action on discretionary costs," said Chief Executive Christopher Bailey.
"While mindful of this external volatility, our plans for the festive season position us well to return to a more positive sales trend in the all-important second half. Looking further ahead, we maintain our focus on - and confidence in - the long-term growth opportunities for our business across channels, regions and product categories," Bailey added.
By Sam Unsted; [email protected]; @SamUAtAlliance
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