Burberry first half revenues up 8%
Burberry has reported better than expected half year profits as the luxury fashion retailer looks forward to its new fragrance and beauty division boosting earnings from 2014.
In the six months to 30 September, underlying profits rose 6% to £173 million while total revenues rose 8% underlying to £883 million.
However, pre-tax profits fell to £111.9 million from £158.7 million a year earlier after taking into account a £73.8 million charge relating to the termination of a fragrance and beauty licence with French company Interparfums.
The termination will enable Burberry to operate fragrance and beauty as a fifth product division giving the retailer direct control of sourcing, logistics and the distribution of its products.
The company said: "The ongoing strategy of greater brand control and integrating fragrance and beauty will enable Burberry to capitalise on the significant growth opportunities in these key opening price point product categories, where Burberry is under-penetrated compared to peers."
Last month Burberry reported that sales had steadied in the final weeks of its second quarter, reassuring investors after issuing a profit warning in September.
Commenting on the results chief executive Angela Ahrendts,said: "In retail/wholesale, which accounts for over 90% of our business, Burberry delivered 7% revenue growth, 11% profit growth and a further improvement in operating margin, all in a challenging external environment. Our five key strategies remain highly relevant and we continue to invest in our retail, digital and technology growth initiatives.
"Integrating fragrance and beauty is a significant brand and business opportunity. Our global teams are excited to partner with long-standing distributors, suppliers and customers to optimise these under-penetrated categories. One consistent brand expression, leveraged across all categories, will underpin future growth in the Beauty division and our existing core business."
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