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Profits flat at Burberry

Burberry saw sales rise 20% in the first half of the year with pre-tax profit flat during the period, but warned of tougher trading since the start of the second half.

Sales at Burberry rose to £539.1 million for the six months to September 30, while pre-tax profit rose marginally by 1% to £97m.

Retail sales increased by 21% to £245m, wholesale revenue rose 23% to £254.4m while licensing sales were flat at £39.7m.

But Burberry warned that trading had become "more difficult" since the start of the second half, with the US proving a "challenging market" for the British luxury brand.

Burberry said in US retail, a higher proportion of sales is now going through stores at a lower gross margin, while the company expects lower US department store re-orders for its wholesale business.

Since the start of the second half, total retail sales are ahead of last year, but like-for-like store sales are down by a mid single-digit percentage point.

Burberry also expects total wholesale revenue to be down by a mid to high single-digit percentage point on an underlying basis in the second half, depending on final demand for in-season re-orders in what Burberry refers to as "volatile markets".

Burberry chief executive Angela Ahrendts said: "The fundamentals of Burberry remain strong, despite the current very challenging environment. With our supply chain and IT investments in their final phases, we are now in a position to drive significant efficiencies in the near term."

She added: "These benefits, along with continued investment in the business, our seasoned management team, strong brand perception and proven strategies underpin our confidence in the future ling term of Burberry."

Burberry has also launched a joint venture in the Middle East with franchise partner The Jashanmal Group to manage all retail and wholesale distribution in the United Arab Emirates under a 15-year agreement.

Burberry is also in talks to launch a joint venture for its non apparel business in Japan.

Angela Ahrendts said: "I am delighted today to announce two joint ventures with long-standing partners, the first in the Middle East and the second for non-apparel in Japan, both of which will accelerate our growth in these key regions."

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