Burberry sticking to global expansion targets

  • 7 November 2012
  • From the section Business
Media captionBurberry chief executive Angela Ahrendts says that a balanced portfolio of products helped boost sales

Fashion house Burberry has told the BBC it is sticking to its expansion plans, despite concerns about the impact of the downturn on luxury brands.

Chief executive Angela Ahrendts said the firm was focusing on increasing its presence in the high-growth markets of Brazil and India.

Earlier, it reported half-year pre-tax profits of £173m, up 6%.

Mrs Ahrendts said the situation had stabilised after a surprise profits warning in September.

Speaking of the profits warning which caused Burberry shares to slump, and raised questions about the outlook for the whole sector, Mrs Ahrendts said: "We were the first ones to come out and say that... in every region around the world we were seeing that footfall [customer visits] had slowed.

"We knew it wasn't Burberry specific.. and it was almost overnight.

"You have big regional things that are happening - elections, the changing of the guard, the euro crisis."

But Mrs Ahrendts said things had now "levelled off" and this could be seen in the latest profit figures.

"We have an annual plan and we reconfirmed our guidance today. We did reconfirm our cap ex [capital expenditure] spend at about £180m to £200m, investing in flagship markets, high growth markets, Brazil, India."

'Brand opportunity'

Burberry said that total revenues for the six-month period to the end of September had risen 8% to £883m.

While Burberry's underlying profits rose, its pre-tax profits for the six-month period fell to £111.9m from £158.7m a year earlier. This figure takes into account a one-off £73.8m payment Burberry made to end a fragrance and beauty licence with French company Interparfums.

The move means that the firm will take back control from April next year of the global sourcing, logistics and distribution of the products.

Commenting on the licensing move, Mrs Ahrendts said: "Integrating fragrance and beauty is a significant brand and business opportunity.

"Our global teams are excited to partner with long-standing distributors, suppliers and customers to optimise these under-penetrated categories."

Burberry has been diversifying its product range away from outerwear and has opened new stores in Hong Kong, Milan, Rome and London.

Sales of accessories for men have grown 40% in the six months to the end of September compared with the same period a year earlier, the company said.

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