Published: Thu, May 18, 2017
Money | By Armando Alvarado

Burberry profits slip as Bailey prepares to hand over the reins

Burberry profits slip as Bailey prepares to hand over the reins

Underlying profits dropped by 21%, which Burberry blamed on restructuring costs, lower wholesale income (down 14%), particularly in the U.S. and the Beauty arm, and a 48% reduction in licensing income.

Statutory pre-tax profits fell £21 million to £395 million in the year to March 31.

The group, which is known for its trenchcoats, has benefited from the drop in the value of the pound in the past year, resulting in a 10pc gain in adjusted profit at reported exchange rates.

In what the British business called a year of "transition" the group said it had hit cost savings of £20m over the past 12 months. This comes amid a "challenging" trading environment particularly in the United States and Hong Kong.

The UK company said accessories outperformed apparel over the fiscal year.

Burberry said the weak pound flattered full-year revenues, up 10% at £2.8 billion, but sales fell 2% at constant exchange rates.

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Its digital shake-up has included the soft-launch of a retail app in the UK.

Burberry Group Plc's earnings beat estimates as cost-cutting and improving consumer trends in China shored up the United Kingdom trenchcoat maker's performance as it prepares for the arrival of a new chief executive officer.

Incoming Burberry CEO Marco Gobbetti will face pressure to secure a larger share of that growth for Burberry when he starts the job in July.

Christopher Bailey, who is now in charge of both creative and executive duties at the company, said it had been a year of "transition" in a fast changing luxury market. "The actions we have taken to lay the foundations for future growth are yielding early benefits and I remain confident that these will build over time", said Christopher Bailey, chief creative and chief executive officer.

Burberry shares - up 11% in the year to date - were the biggest risers in early trading on the FTSE 100 in the wake of the results statement, rising more than 2%.

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