Burberry interim profit rises despite Hong Kong disruption
Luxury fashion brand Burberry posted a jump in interim profit and revenue on Thursday and backed its full-year guidance despite "considerable" disruptions in Hong Kong.
In the half to 28 September, pre-tax profit rose 11% to £193m on revenue of £1.3bn, up 5% on the same period a year ago. Retail sales were up 4% at constant exchange rates, or 6% on a reported basis.
The company saw high single digits growth in UK revenue and mid-single digits growth in revenue from Continental Europe, while the Middle East returned to growth in the second quarter but was negative in the half overall.
In the Americas, revenue grew in the low single digits, while revenue in mainland China saw mid-teens growth but Hong Kong suffered a double-digit decline.
Burberry maintained its guidance for broadly stable top-line adjusted operating margin despite pressure on margins from disruptions in Hong Kong. However, it also said it now expects gross margin for the 2020 to decline around 150 basis points, down from its previous expectations of a 100 basis points drop. The incremental 50bps primarily reflects mix and the disruptions in higher margin Hong Kong market, it said.
Chief executive officer Marco Gobbetti said: "We are pleased with our performance in the half, as we remain on track to deliver the first phase of our strategy. New product now represents a high proportion of our assortment and the customer response has been positive delivering strong double digit growth.
"We also continued to strengthen momentum around our brand and transform our distribution. We delivered financial results in line with guidance despite the decline in Hong Kong and we confirm our outlook for FY 2020."