Despite a drop in profits, fashion firm Burberry said that it continued to be “cautiously optimistic” over the Christmas season.
The company reported an operating profit of £75.8m for the six month period ending September 30, which is down 2 per cent compared to the same period a year ago. Retail sales showed a rise of 9 percent, but wholesale sales dipped 1 per cent.
Rose Marie Bravo, the chief executive, stated that performance was solid in a period of “strategic investment and transition”. She added: "With cold weather arriving and the holidays approaching, we enter our most important time of year with cautious optimism".
Ms Bravo who is credited with having transformed Burberry into a worldwide brand is stepping down in July next year. Her place will be taken by Ms. Angela Ahrendts, who is currently serving as the executive vice president of Liz Claiborne. However, Ms. Bravo will continue to be the vice-chairman.
Burberry's expansion programme in Asia has not been factored in these results. It acquired the operations and assets of its distributors in Taiwan in May.
According to Ms. Bravo sales to emerging markets including Poland and Brazil "increased substantially" in the first half and revenues continued to grow in the United States and Asia, excluding Japan. Japan and Europe sales have shown a "small" decline.
In May, GUS, Burberry's parent company, announced plans to hive off its remaining 65.5% stake. The details of the demerger plan are to be disclosed in its half-year report on Thursday. Following this news, Burberry also increased its interim dividend by 25% to 2.5 pence a share.
Meanwhile, Atlas infrastructure investment programme, under which Burberry is revamping its IT systems and business processes in the distribution lead, was launched in May. The programme extended over three years is expected to cost 50 million pounds.
Andreas Inderst, of the brokers ABN Amro, said: "This was a solid performance overall. The results look better than we and the market consensus expected on bottom line.”
However, the broker Seymour Pierce does not share the same sentiment. In a note it said: "With the demerger coming in December, we believe there will be many GUS holders not interested in holding shares in Burberry, and this could lead to the share price coming under more pressure."
In early trading on Tuesday, Burberry was down 1.7% at 393.75 pence.
Posted
on : Tue, 15 Nov 2005 13:10 GMT | Business News
By : Pippa Fielding
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