Burberry reports positive financials but cuts profit guidance
Burberry warned on Wednesday that wholesale and retail profit for fiscal 2016 would likely come in around £40 million ($62 million) lower than expected, citing unfavorable foreign-exchange movements.
The downbeat guidance came as Burberry reported net profit of £336.3 million ($522,85 million) for the year ended March 31, up 4.3% from £322.5 million in the same period last year. Adjusted pretax profit, which strips out one-time items, fell to £455.8 million from £461 million a year earlier.
Revenue rose 8% to £2.52 billion ($3,61 billion) from £2.33 billion a year earlier, driven by growth in wholesale and retail.
The results mark the first full year under Chief Executive Christopher Bailey, who in May 2014 succeeded long-time CEO Angela Ahrendts, now Apple Inc.’s retail chief. They also highlighted the difficulties of being an international company at a time of significant volatility in currency markets and disruption in Hong
Burberry now expects an exchange rate benefit for fiscal 2016 of £10 million, down from its prior expectations of a £50 million lift, as the pound has strengthened. The majority of the company’s reported revenue is earned in foreign currencies but a significant proportion of costs are denominated in sterling.
Revenue in the Asia Pacific region has slowed following disruptions in Hong Kong, Burberry said. “The team is very focused on the Hong Kong market,” said Chief Financial Officer Carol Fairweather, adding that Burberry is focusing more on local customers.
Burberry will continue to invest in opening new stores in its flagship markets, and in marketing and digital but will also look across the company for ways to control costs