Commenting on the strong financial momentum, Christopher Bailey, Chief Creative and Chief Executive Officer, said, “We’re proud to report that Burberry delivered a strong first half, with sales increasing by 14 percent and profit up 6 percent, both underlying.”
Impact from exchange rates in the first half led to reduction in reported revenue by 75 million pounds (119.4 million dollars). Retail and wholesale revenues increased 15 percent underlying and adjusted retail/wholesale operating profit went up 8 percent underlying. Operating margin went down 80 basis points underlying at 13.1 percent.
In FY 2015, Burberry expects net new space to contribute low to mid-single-digit percentage growth to total retail revenue, including about 20 mainline store openings and about 20 closures during the year. Excluding Beauty, Company expects wholesale revenue at constant exchange rates to be down by a mid-single-digit percentage in the six months to March 31, 2015. For Beauty, wholesale revenue is still expected to grow by about 25 percent at constant exchange rates in FY 2015.
In the first half, exchange rates significantly affected reported profit. If exchange rates remain at current levels, Burberry does not expect a material impact in the second half of FY 2015. It expects some downward pressure on the full year retail/wholesale margin, reflecting the negative impact of exchange rates, a more difficult external environment and continued investment in key initiatives to drive long-term profitable growth. At current exchange rates, reported licensing revenue in FY 2015 is expected to be reduced by about 10 million pounds (15.9 million dollars) given the movement in the sterling/yen rate.