Burberry’s annual profits crash from £634m to £383m sparking ‘challenging’ warning | City & Business | Finance

Burberry chief executive Jonathan Akeroyd has warned that it faces a “challenging” first half of the year, after reporting a 40 percent crash in its annual profits.

The luxury goods house blamed the uncertain economic environment and a slowdown in demand for its pre-tax profits for the 12 months to the end of March falling from £634million to £383million. At the same time, its revenues fell four percent to £2.97billion. The results were worse than the company and market had expected.

Burberry blamed falling demand for luxury goods in key markets like China and South Korea, inflation pushing up its rent and utilities costs, write offs, adverse currency movements, its store refurbishment programme and investing in new products.

Akeroyd, who took charge of Burberry two years ago, said that given the “uncertain” environment, it expects trading conditions to remain tough in the first half, with wholesale revenues forecast to be down 25 percent. However, he does expect Burberry’s fortunes to improve in the second half of its financial year.

“While our financial results underperformed our original expectations, we have made good progress refocusing our brand image, evolving our product and strengthening distribution while delivering operational improvements,” he said. “We are using what we have learned over the past year to finetune our approach, while adapting to the external environment.”

Source link