Burberry unveils new buyback after profits fall less than feared

Burberry reported annual profits at the upper end of expectations and promised investors a new £300m share buyback.

On revenue of £2.8bn in the year to 31 March, which had already been announced, the beige-checked fashion house delivered adjusted profits of £462m, which were up 10% at the reported level and down 21% at the underlying level.

Reported profit before tax of £395m was down 5%.

Profit was boosted by £20m of cost savings that management plan to increase to £50m in the new 2018 financial year and to at least £100m by 2019, while 2017 was hit by lower wholesale income, particularly in the US and from its beauty range, and licensing income, principally due to planned expiry of Japanese licence.

Adjusted diluted earnings per share rose 11% to 77.4p after a slightly higher tax rate and a £100m buyback of 6.7m shares. Reported diluted EPS was down 6%.

A final dividend of 28.4p saw the full payout increased by 5% to 38.9p, with a further £50m of the current buyback to come next year plus a new £300m buyback to be completed in the new financial year including the distribution of the upfront sum from its recently announced beauty partnership with Coty.

"2017 was a year of transition for Burberry 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.

In July Bailey will officially hand over the CEO role to Marco Gobbetti, with whom he said he "excited to work closely with" on this next chapter.

No changes were made to guidance for 2018 adjusted profit at constant exchange rates, with around £30m of currency effects expected, £20m worse than anticipated last month.

As well at the aforementioned £50m cost savings, Burberry plans to invest about £20m and will make around £40m of one-off restructuring costs.