Burberry profit rises as Yorkshireman CEO takes helm

Christopher Bailey
Christopher Bailey
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LUXURY brand Burberry met forecasts with an 8 per cent rise in annual profit, though it reiterated that if foreign exchange rates remain at current levels there will be a material impact on 2014-15 profit.

The results are the first since chief creative and chief executive officer Christopher Bailey, who is from Halifax, officially succeeded Apple bound Angela Ahrendts on May 1, though his appointment was announced in October.

The 158-year-old firm, which makes its heritage trenchcoats in Castleford, said it made adjusted pre-tax profit of £461m in the year to March 31 - bang in line with analysts’ consensus forecast, on revenue up 17 per cent to £2.33bn.

Burberry, which ended the year with net cash of £403m, raised its full year dividend 10 per cent to 32 pence and said it was confident of driving sustainable future growth.

But the firm again flagged the potential impact of foreign exchange movements on the translation of profit into sterling.

As an indication of the potential hit it said rebasing 2013-14 retail/wholesale profit for current exchange rates would have reduced reported profit by about £40m and adjusted operating margin from 17.5 per cent to around 16.3 per cent.

Burberry said at current exchange rates reported licensing revenue in 2014-2015 would be reduced by about £10m given the movement in the sterling/yen rate.

The firm said net new space was expected to contribute low to mid single-digit percentage growth to total retail revenue in 2014-15, while excluding beauty it expects wholesale revenue at constant exchange rates to be broadly unchanged in its first half.

For beauty, wholesale revenue is expected to grow by about 25 per cent at constant exchange rates in 2014-15.

In licensing the firm expects broadly unchanged revenue at constant exchange rates from both Japan and global product licences.

Despite some investors fretting over Mr Bailey’s dual role, shares in Burberry are up 2 per cent over the last six months.