20th May 2015 08:14
LONDON (Alliance News) - Burberry Group PLC's shares took a hit on Wednesday after it lowered its profit guidance for its current financial year due to movements in foreign exchange rates and said it is seeing "increased uncertainty" in some markets.
Shares in Burberry were down 4.3% at 1,731.00 pence Wednesday morning, making it the biggest faller in the FTSE 100 index.
The fashion retailer said it expects profit in the current financial year to be around GBP10 million higher than in its recently completed financial year, if exchange rates remain at current levels and it continues to be hit by currency fluctuations. That is GBP40 million lower than the guidance it gave in its trading update in April.
On Wednesday Burberry reported a pretax profit in the year ending March 31 of GBP445 million, up from GBP444 million the year before, which would give a new profit guidance for the current year of GBP455 million, down from GBP485 million previously.
"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.
In its recently-ended financial year, Burberry reported a revenue increase of 8% to GBP2.5 billion from GBP2.3 billion, which it said was driven by strong customer demand for its heritage trench coats, cashmere scarves and ponchos.
Underlying revenue in menswear also increased by 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 added that its retail business continues to outperform the wholesale business, with revenue increasing 11% and 3%, respectively, and noted that wholesale was down 2% excluding beauty.
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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