Burberry has beaten expectations, staving off a challenging environment to post a marginal rise in profits and revenue.
The luxury brand nudged sales up from £1.1bn to £1.104bn for the six months to 30 September, while adjusted pre-tax profits rose from £152.2m to £152.9. UBS had estimated that profits would drop seven per cent to £142m.
Retail/whole revenue was up one per cent on an underlying basis, with adjusted operating profit up five per cent, but licensing profit was down 13 per cent as Burberry took direct control of its market in Japan following the expiry of licenses.
Adjusted earnings per share rose two per cent to 26p.
The iconic clothing business has raised its interim dividend by five per cent to 10.2p.
Why it's interesting
Burberry has been warning of the impact around slowing consumer demand from China and currency headwinds for many quarters now, but the firm appears to be weathering the storm so far.
China remains a concern, as although there was growth from the Chinese consumer it "softened in the second quarter". It's not just affecting sales into the mainland, though. "Within EMEIA, we saw strong double-digit percentage growth from travelling Chinese customers in continental Europe, but there was more muted growth in the UK (over one-third of the region's retail revenue), given the relative strength of sterling against the euro," the company said.
But Burberry is not standing still. It continues to take a long-term view on emerging markets, and opened two mainline stores in Moscow during the period, as well as one in Bahrain, closing its franchise stores in these markets. Conversely, the company opened a second franchise store in both South Africa and Panama.
It has deployed tight cost management, saving around £20m. It has also "reduced internal complexity" and given a "more consistent brand experience for customers" by cutting back three sub-brands to just one.
What they said
Christopher Bailey, chief creative and chief executive, said: "This robust performance reflects decisive action as the external environment became more challenging in key markets over the period. We enter the second half mindful of this backdrop, but confident in our strongest-ever festive plans and emphasis on productivity and efficiency.
"Beyond these immediate priorities, we remain focused on building Burberry for long-term, sustainable growth and value creation. In an evolving luxury environment, we see compelling opportunities by channel, region and product, underpinned by the strength and distinctiveness of our authentic British brand."