Profits hit by infrastructure changes
Sales at upmarket fashion brand Burberry soared 14 per cent to£850.3 million, in its preliminary results for the year to March 31.

Adjusted EBIT rose 12 per cent to£185.1 million. However, profits were affected by Atlas costs of£21.6 million - relating to the infrastructure redesign initiative announced in 2005. There were plant closure costs of£6.5 million, following the closure of the Treorchy factory in March.

Underlying retail sales surged 24 per cent for the year. Comparable store sales increased 12 per cent, with all regions reporting double-digit growth. The group said: 'Benefiting from new luxury products, an effective marketing campaign, enhanced product flow and basic replenishment, Burberry experienced increases in store traffic and average selling prices.'

The group said that retail is now the largest distribution channel, with a 48 per cent share of revenue. It has accelerated the pace of expansion, opening 12 stores, one replacement store, 13 concessions and three outlets during the year. Wholesale revenue increased 8 per cent, with licensing sales also up 10 per cent for the year.

Burberry chief executive Angela Ahrendts said: 'Our 150th anniversary was an outstanding year for Burberry. On the strategic front, we advanced the luxury component of the brand, accelerated retail expansion and continued to evolve the operating model. We face this year with confidence, given the strength of our brand, effectiveness of our strategies and talent of our teams.'

Seymour Pierce analyst Andrew Wade said: 'The shift in channel mix from wholesale to retail has seen gross margin improve, helped by reduced markdowns and sourcing gains, but operating costs increase accordingly. The business has invested significantly in operations and supply chain, which should yield savings.'