Burberry posts profit uplift but cautions on China recovery

The luxury fashion house said pre-tax profit climbed 4% to £511m in the 53 weeks to April 2. 

Adjusted operating profit jumped 32% on a reported currency basis to £523m, as sales grew 21% to £2.83bn. Adjusted operating profit margin increased 160bps to 18.5%. 

Burberry hailed “strong brand momentum” and a “material improvement” in its sales mix during the year, despite trading in what it called a “challenging external environment”.

And it warned that its outlook is “dependent on the impact of Covid-19 and rate of recovery in consumer spending in mainland China”.

Burberry’s performance is already being held back by China, where fresh lockdowns have been enforced on large swathes of the country to combat a new wave of Covid-19 cases. China’s biggest city and financial centre, Shanghai, is among the impacted locations.

Burberry said like-for-like store sales grew 7% year-on-year in the fourth quarter of its fiscal year, but admitted that lockdowns in mainland China were “weighing on performance”. 

However, across the full 12-month period, like-for-like store sales in mainland China were up more than 50% compared to the previous year. Like-for-likes in Burberry’s shops in the US almost doubled, and were up 81% in South Korea.  

The fashion brand hailed “improving trends” in Europe, the Middle East, India and Africa, despite “an ongoing headwind” from reduced tourism.

It said its focus on outerwear and leather goods bore fruit, as full-price sales in the two key categories grew 39% and 28% respectively year-on-year.

Burberry said: “We maintain our guidance of high single-digit revenue growth and meaningful margin accretion at CER in the medium-term.

“Our outlook is dependent on the impact of Covid-19 and rate of recovery in consumer spending in Mainland China. While the current macro-economic environment creates some near-term uncertainty, we are actively managing the headwind from inflation.”

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