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Burberry ramps up investment after profits soar

Burberry said it will almost double capital spending to £130m next year with a focus on expanding key product areas including kidswear and moving into emerging markets.

The luxury British heritage brand and retailer saw its pre-tax profits before exceptional items climb 23% to £215m for the year to March 31, well ahead of the top forecasted figure of £208m.

Burberry’s revenue for the period was up 7% to £1.3m, largely driven by a shift in strategy to place more focus on retail.

Retail sales rose 15% to £748.8m with like-for-like sales up 7%.

Burberry said the growth was driven by a general resurgence of the luxury market as well as earlier stock deliveries and stronger sales of outerwear and kidswear.

Burberry’s wholesale sales dropped 15% to £433.6m, which was in line with the company’s expectations.

Wholesale was particularly weak in the first half of the year but improved in the second half and Burberry said it expects to see a continued improvement in wholesale in the first half of the current financial year as the market continues to improve.

Burberry said it will invest in product development over the next year including the expansion of kidswear, which it wants to grow from 5% to 10% of the business, menswear and small leather goods.

Burberry plans to open 20 to 30 stores this financial year, primarily in the Americas and Asia Pacific. The company also plans to move into emerging markets, particularly Brazil and India, with franchise stores.

Burberry will also invest in online to integrate its separate transactional websites into one global platform and drive sales to its retail and wholesale chanels.

Chief executive Angela Ahrendts said: “Looking forward, while mindful of the economic environment, Burberry plans to build on its strong financial position by accelerating investment in growth initiatives in retail, digital and new markets, while continuing to enhance the brand.”

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