Burberry profits fall 5pc despite boost in sales from weaker pound

Pre-tax profits at British fashion brand Burberry (LON:BRBY) fell to £394.8 million compared to £416 million a year earlier.

Total sales of the luxury brand fell by two percent in the year to March 31 despite the weaker pound driving tourists to the Regent Street store in London. 

“The external environment remained challenging… particularly in the US and Hong Kong” said Burberry in a statement.

“For the industry, newness led growth and accessories outperformed while apparel saw softer trends.”

Christopher Bailey, Burberry’s chief creative and chief executive, said: “2017 was a year of transition for Burberry in a fast changing luxury market.

“The actions we have taken to lay the foundations for future growth are yielding early benefits and I remain confident that these will build over time.

“Marco Gobbetti assumes the role of CEO (chief executive officer) from July.

“With his extensive experience in the sector, we will build on these foundations to elevate and strengthen the brand further and take Burberry to the next level as a global luxury retail and digital business.

“I am excited to work closely with him in this next chapter.”

Burberry is working on its cost-cutting initiatives and has already slashed £20 million worth of costs, which it plans to increase to £50 million in 2018 and at least £100 million by 2019.

Earlier this month the fashion brand announced plans to relocate 300 jobs from London to West Yorkshire in order to save further costs.

“The vital signs look to be picking up at Burberry, just ahead of the arrival of new boss Marco Gobbetti. Despite all the difficulties of the last few years, cash flow has held up throughout, underlining the attractions of the stock. Luxury goods can generate high margins, selling baubles to a gilded clientele and Burberry’s long-term potential seems strong.” said Steve Clayton from Hargreaves Lansdown.

Burberry shares were the biggest risers in early trading, rising over 2 percent.