Luxury fashion house Burberry has hailed a “very encouraging” response to collections from new designer Riccardo Tisci as it held annual earnings firm.
The group – famous for its trademark trenchcoats and signature brown check – said with exchange rates stripped out, underlying pre-tax profits remained flat at £443 million over the year to March 30, while revenues dipped 1% to £2.7 billion.
But group like-for-like sales lifted 2%, with “mid-single digit” growth in the UK thanks to higher tourist spend over the final six months.
Marco Gobbetti, chief executive of Burberry, said: “We made excellent progress in the first year of our plan to transform Burberry, while at the same time delivering financial performance in line with expectations.
“Riccardo Tisci’s first collections arrived in stores at the end of February and the initial reaction from customers is very encouraging.”
On a reported basis, pre-tax profits rose 7% to £441 million over the year and were down 6% underlying after the impact of the weak pound.
The group is putting faith in collections from Mr Tisci to help keep it on track for the new year, confirming expectations for “broadly stable” earnings and revenues at constant exchange rates over 2019-20.
But it said there will be a “more pronounced” weighting of earnings in the second half, with growth set to pick up over the final six months as Mr Tisci’s collections hit its stores.
Mr Tisci replaced long-standing creative director Christopher Bailey last year and the group is in the process of rolling out his debut collection across all its stores.
Shares fell 5% after its results.
Richard Hunter, head of markets at Interactive Investor, said Burberry’s results showed it is making progress but not “shooting the lights out”.
He added: “Given the scale of the planned changes, there inevitably remains much to do.
“Growth in its key Asia Pacific region, which accounts for 41% of revenues, is still in evidence but is more subdued, potentially exacerbated by the ongoing spat between the US and China and the economic consequences.”
Figures showed China saw low single-digit percentage growth in retail sales, as did the rest of its worldwide operations, with the second half more muted in some key markets such as Hong Kong and the US.
Wholesale revenues grew 7% on an underlying basis and with exchange rates stripped out, while its licensing revenues surged 53% after it transferred its beauty division to a licensed partnership.
On Brexit, Burberry said a no-deal outcome would likely have a “material but manageable” impact on the business.
“We continue to prepare mitigating actions to limit the operational and financial impact in the short term,” it added.
It has previously warned it could face tens of millions of pounds in extra tariff costs if the UK crashes out of the EU without a deal.
Burberry makes its distinctive trenchcoats in Yorkshire, while it imports other items from Europe.