Sales at luxury British brand Burberry rose 8% in its first half despite profits dipping due to the label taking its fragrance and beauty division in house.
In the six months to September 30 revenues rose 8% to £883m as pre-tax profits dropped almost 30% to £112m after Burberry had to pay a one-off £73.8m to end a fragrance and beauty licence. However, taking this into account adjusted profits increased 6% to £173m.
Retail revenue grew 10% to £577m and accounted for 65% of revenue for the first half as like-for-like sales rose 3%. During the period Burberry opened 13 stores and 16 concessions, while closing seven and nine respectively. Openings were focused in flagship markets including Hong Kong, Milan, Rome and London, including the brand’s largest flagship on Regent Street.
However footfall in London decelerated in the second quarter, which Burberry said was in part due to the disruption from the Olympics, impacting both tourist and domestic customers.
Wholesale revenues rose 5% driven by men’s accessories, small leather goods and men’s apparel.
Across both retail and wholesale menswear was the fastest growing product division, up 12%, and now accounts for 25% of retail/wholesale revenue.
Chief executive Angela Ahrendts said: “In retail/wholesale, which accounts for over 90% of our business, Burberry delivered 7% revenue growth, 11% profit growth and a further improvement in operating margin, all in a challenging external environment. Our five key strategies remain highly relevant and we continue to invest in our retail, digital and technology growth initiatives.”
“One consistent brand expression, leveraged across all categories, will underpin future growth in the beauty division and our existing core business.”
Burberry will directly operate fragrance and beauty from 1 April 2013, following the end of its existing licence relationship with Interparfums SA