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Burberry profits up despite hit from Hong Kong

Burberry has reported a 14% increase in adjusted operating profit to £203m for the six months to 28 September 2019. 

Operating profit rose 17% to £202m compared with the same period in 2018. This is despite “incremental pressure” on its gross margin from a decline in Hong Kong, where trading has been impacted by ongoing protests. 

Sales in Hong Kong declined by double digits. 

However, overall Burberry’s revenue was up 5% to £1.3bn during the half. 

It said chief creative officer Riccardo Tisci’s collections delivered ”strong double-digit growth” during the period, and new product now represents around 70% of its main retail store offer, compared with 10%-15% in March.

The company’s guidance for the full year – to deliver broadly stable top-line and adjusted operating margin – remains unchanged.

CEO Marco Gobbetti added: ”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.”

The luxury retailer has also announced a new partnership with Chinese technology company Tencent to deliver social retail in China. 

Burberry will open a store in Shenzhen, China’s technology hub, in the first half of next year. Powered by Tencent technology, it will trial innovation that can be extended to Burberry’s existing network in China. 

 

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