City turns sour on Burberry as profits hit by FX but it stays in vogue with shoppersComments Off on City turns sour on Burberry as profits hit by FX but it stays in vogue with shoppers
Shares dropped 4.98% to 1718p after the British brand, led by former design chief Christopher Bailey, saw profits dented by adverse foreign exchange changes in the year to 31 March.
The company, whose fans include supermodel Naomi Campbell, also said currency movements were expected to cut £40 million off its earlier forecasts for retail and wholesale profits for its 2016 financial year.
Burberry joins a string of luxury rivals, such as Prada and LVMH, that have been affected by protests in Hong Kong and a fall in spend from the Chinese. Pre-tax profit at the firm was largely static at £444.6 million.
Chief executive Bailey, whose £27 million pay package was attacked last year when he took the role, said: “At this early stage of the year, we are seeing increased uncertainty in some markets.”
Christopher Bailey on the Burberry catwalk with James Corden and models Jourdan Dunn and Naomi Campbell (Picture: Burberry)
He added: “Against this background, we will continue to manage our business dynamically, capitalising on the significant opportunities we have by channel, region and product to create long-term shareholder value.”
Mike van Dulken, head of research at Accendo Markets, said the City’s attitude to Burberry had soured “as investors deem unfashionable the first set of full-year results from Christopher Bailey since he replaced the iconic Angela Ahrendts who jumped ship for Apple”.
The reaction came despite the full-year sales, including the trenchcoats, climbing 8% to £2.5 billion, fuelled by strong retail sales and double-digit growth in the Americas and EMEA.
Its British-made trench coats and cashmere scarves were among the best-selling products, and expansion included openings in Los Angeles and Tokyo.
Burberry finance chief Carol Fairweather said around two-thirds of £180 million capital expenditure for 2016 would be used in retail and “weighted toward Asia”, with a new store opening in Korea and investments into Japan and China.
Burberry raised its final dividend by 10% to 35.2p.