* Underlying H1 pretax pft 173 mln stg, f'cst 157-172 mln
* H1 revenue 883 mln stg, up 8 pct
* Net cash 237 mln stg, H1 dividend 8 pence, up 14 percent
* Guidance issued in October unchanged
* Fragrance move seen pft neutral 2013-14, accretive after
By James Davey
LONDON, Nov 7 British fashion house Burberry
said it is in strong shape heading into Christmas as
wealthier shoppers continue to spend on its top-end ranges.
"We are as strong going into the third quarter than we've
been in the seven years I've been with the company," said Chief
Executive Angela Ahrendts. "With the things we can control we
feel very positive."
The firm, best known for its raincoats lined with a
distinctive camel, red and black check design, sent shock waves
through the industry in September when it warned of a slowdown
in China, which has been the driving force of a near three-year
boom in demand for luxury goods.
Burberry said on Wednesday that while some of its more
"aspirational" consumers had been hit by the faltering global
economy it had sold a higher proportion of goods from its
top-end Prorsum and London lines to its wealthiest customers,
boosting first half profit margins.
The 156-year old firm is following an industry-wide trend of
buying back licences, in a deal to end its agreement with
Interparfums, bringing fragrance and beauty in-house
from April 2013..
"The opportunity for us is not only huge in the existing
category (fragrance and beauty) but it will be the positive
effect it has back on the core business as well," Ahrendts told
She hopes fragrance will create a "halo effect" on sales of
other products through cross-marketing and being able to tempt
new fragrance customers with higher priced products. Chief
Financial Officer Stacey Cartwright said Burberry sees fragrance
and beauty as a growth area where it lags peers, including LVMH
"By bringing it in-house and treating it as part of the core
we will be able to leverage this business much more
significantly over the medium and longer term," Cartwright said.
Burberry will make a 181 million euro ($231.71
million)payment to Interparfums for ending the licence, 71
million pounds ($113 million) of which is taken as an
exceptional item in first half accounts.
The group made a profit before tax and one off items of 173
million pounds in the six months to Sept. 30. That compared to
analyst forecasts of 157-172 million pounds, with a consensus of
167 million pounds, according to a company poll, and 162 million
pounds last year.
The fashion firm said it expects the fragrance move to be
broadly neutral to underlying profit in 2013-14 and "very
nicely" earnings accretive thereafter.
Shares in the firm, down more than 15 percent in the last
six months, were down 1.2 percent at 1,237 pence at 1258 GMT,
valuing the business at about 5.5 billion pounds.
"The backdrop is tough, Christmas is crucial, and we see few
near-term catalysts," said Investec analyst Bethany Hocking.
Last month Burberry said sales had steadied in the final
weeks of its second quarter, calming investors rattled by the
earlier profit warning. On Wednesday there was no change to its
guidance for the second half.
Total first-half revenue was 883 million pounds, up 8
percent at constant exchange rates, with first quarter growth of
11 percent slowing to 5 percent in the second.
The firm said its retail/wholesale adjusted operating margin
was up by 60 basis points to 15.5 percent.
The group, which ended the half with net cash of 237 million
pounds, is paying an interim dividend of 8 pence, up 14 percent.