Luxury handbags boost for Burberry

Fashion house Burberry today said that "outstanding" demand for its new range of luxury handbags helped it to a 7% hike in half-year operating profits.

The London-based firm said the handbags, modelled by Kate Moss, ensured revenues for the six months to September 30 rose 11% to £392 million, while operating profits before one-off costs were up to £84.2 million.

Retail sales rose 23% as the firm, famous for its black, tan and red check design, also benefited from the celebrations surrounding its 150th anniversary.

The company said it enjoyed international sales growth, with strong trading at its Hong Kong stores lifting Asia Pacific sales 17% to £75.8 million, while sales in new markets including Russia, eastern Europe, the Middle East and South America surged 39% to £8.9 million.

However, the sales boost failed to prevent a slide in pre-tax profits as the firm was hit by the cost of its Project Atlas restructuring initiative.

Profits for the six months fell from £78.1 million to £73.4 million as restructuring costs climbed from £3 million last year to £9.6 million.

Alongside sales at its 300-plus stores, including sites in Regent Street and Knightsbridge, Burberry added that wholesale revenues climbed 1% but warned that production delays for key outerwear and handbags and its limited ability to respond to repeat orders had curbed wholesale growth.

Chief executive Angela Ahrendts said: "Led by excellent retail performance, strong outerwear sales and enthusiastic demand for new accessories collections, Burberry delivered a 10% gain in adjusted operating income in the first half.

"The management team moves confidently into the second half as we continue to execute our strategies."

Burberry raised its interim dividend from 2.5p per share to 2.875p per share, but the fall in pre-tax profits sent shares in the company down more than 1% today.

Source: icwales.icnetwork.co.uk