Burberry profit rises in H1; expects margins to decline further amid Hong Kong unrest

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Burberry reported a rise in half-yearly profit as new collections boosted sales, though the UK fashion brand said it expected a further decline in margins amid civil unrest in Hong Kong.

For the 26 weeks ended 28 September, pre-tax profit rose 11% to £193m and revenue increased 5% to £1.28bn.

Retail comparable store sales rose 4% with new collections growing strong double digits, offset by a softer performance of replenishment product lines, the company said.

EMEIA grew by a mid-single digit percentage and the Americas grew by a low-single digit percentage.

In Asia, Mainland China grew mid-teens, Korea grew high-single digits and Japan was up mid-single digits. However, Hong Kong declined double digits.

Wholesale revenue was flat, with double digit growth in luxury accounts offset by non-luxury door closures.

'We delivered financial results in line with guidance despite the decline in Hong Kong and we confirm our outlook for FY 2020,' the company said.

Guidance for broadly stable top-line and adjusted operating margin was maintained, though margins were expected to come under increased pressure from the disruptions in Hong Kong and mix.

'We now expect gross margin to be down around 150 basis points (previously 100bp decline). The incremental 50 basis points largely reflects mix and the disruptions in higher margin market Hong Kong,' Burberry said.


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