Trench coat and scarf sales lift second-half revenues at Burberry

15th Apr 2015 07:24

High end fashion label Burberry said strong demand for its iconic heritage trench coats and scarves gave results a boost in the second half, though the outlook was mixed.Underlying revenues were up 9% year-on-year at £1.42bn in the six months to 31 March, though this was a slowdown from the 14% growth seen in the first half.The luxury group said retail revenues were up 13% underlying at £1.06bn,as double-digit percentage growth in the Americas and Europe, Middle East, India and Africa (EMEIA) was partly offset by low single-digit growth in Asia Pacific, which was affected by a further deceleration in the Hong Kong market.Underlying wholesale revenues were unchanged at £331m, while licensing revenues grew 3% to £33m.Chief creative and executive officer Christopher Bailey said he was pleased with Burberry's performance "despite an uncertain external environment".He said: "Customers responded strongly to product innovation, especially in our core British-made heritage trench coats and scarves, while we continued to invest in digital and retail initiatives, including flagship openings in Los Angeles and Japan."Looking ahead, Bailey said "external challenges" are expected to continue in the new financial year ending March 2016.The group predicts retail/wholesale profits to be £50m higher than the year just gone at current exchange rates, up £10m from previous guidance.However, the benefit from FX and tight cost control on margins is forecast to be partly offset by "geographic and channel mix and continued investment in the business".The market reaction to Wednesday's update was mixed, with strong early gains being mostly erased by mid-morning.Richard Hunter from Hargreaves Lansdown Stockbrokers said the company "remains in fashion" and the outlook is "extremely healthy". However, a 25% rise in the stock over the last year - the wider FTSE 100 has gained just 7.5% - has "prompt[ed] the market to think that the shares may be up with events for the moment", he said.The stock was up 0.6% at 1,794.75p by 10:06, having pulled back after touching a high of 1,833p.Concerns about a slowdown in China may also have been weighing on sentiment, given Burberry's heavy exposure to the Chinese luxury sector. Figures released Wednesday showed Chinese gross domestic product rose at an annual rate of just 7% in the first quarter, a six-year low and below the 7.3% growth seen in the preceding three months.