Burberry ends BPI perfume licence talks -sources

PARIS, Sept 19 Wed Sep 19, 2012 12:34pm EDT

PARIS, Sept 19 (Reuters) - Talks have ended between Burberry and Beaute Prestige International (BPI) about a partnership to make and distribute the UK fashion brand's perfumes, two industry sources with direct knowledge of the matter told Reuters on Wednesday.

Negotiations collapsed because Burberry wanted to bring the fragrance business in-house to consolidate its sales and use BPI, the perfume unit of Japan's Shiseido, mainly as a distributor, one of the sources said.

Burberry is now seen as likely to press ahead with the move in-house, implying new costs. Depending on how the transition is managed, it could also lead to lost perfume income in the short term, analysts said.

"BPI was in talks with Burberry for a long time but what BPI could bring them was not what they wanted, so the talks ended," the first industry source said, adding that BPI's strength lied in its vast travel retail distribution network.

Ending talks with BPI raises questions as to whether Burberry will be able to revamp its distribution and find a manufacturer for its perfumes before a licence agreement with Interparfums ends on Dec. 31.

Burberry, which issued a profit warning last week, said in July it would buy back its perfume licence from Interparfums for approximately 181 million euros ($236 million) after failing to reach an agreement with the Paris-listed perfume maker. ($1 = 0.7660 euros) (Editing by James Regan)