As trailed, half-year results from Burberry (BRBY) were drained by adverse foreign exchange movements. Sales would have grown by 14 per cent without the currency headwind, which wiped £75m off the top line. Similarly, adjusted pre-tax profit rose 6 per cent on an underlying basis, but that translated into a 12 per cent decline after a currency hit of £31m.
Forex aside, however, the fashion house enjoyed a decent start to the year, with double-digit underlying sales growth across all regions. Retail sales, which accounted for 68 per cent of the total, rose 15 per cent (underlying), with a good performance from Asia Pacific. Management noted, however, that demand in the region softened in the second quarter.
Wholesale revenues grew 13 per cent, although that was driven mainly by the beauty category, which benefited from a new fragrance launch and weak comparables. Strip the beauty business out and divisional sales rose just 5 per cent. Overall, accessories sold well, notably solid leather bags. Outerwear and large leather goods were also popular with shoppers.
The outlook statement was decidedly mixed. Excluding beauty, wholesale revenue is expected to fall by around 5 per cent in the second half amid uncertainty over lucrative Asian travel markets and weakness in Europe. And margins for the full year will also come under pressure, reflecting exchange rates, a difficult trading environment and investment in "key initiatives".
UBS expects adjusted EPS of 76p for the full year, up marginally from 75p last year.
| BURBERRY (BRBY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,512p | MARKET VALUE: | £6.7bn | |
| TOUCH: | 1,511-1,512p | 12-MONTH HIGH: | 1,574p | LOW: 1,348p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 266p | NET CASH: | £307m | |
| Half-year to 30 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 1.03 | 159 | 25.8 | 8.8 |
| 2014 | 1.10 | 142 | 23.8 | 9.7 |
| % change | +7 | -11 | -8 | +10 |
Ex-div: 29 Dec Payment: 23 Jan | ||||
