Burberry ‘energised’ by early results of brand repositioning as half-year profit meets forecasts

Excellent response to fashion retailer’s new collection drives profits.

Article updated: 8 November 2018 10:00am Author: Ian Forrest

  • The company announced a 4% rise in revenue and 8% rise in adjusted operating profit, prompting a modest rise in the shares this morning.
  • The luxury fashion brand has reaffirmed its outlook for the full year.
  • We maintain our ‘hold’ recommendation for investors seeking a balanced return and willing to accept a medium to higher level of risk.

Luxury retailer Burberry’s interim figures today were reassuring if not spectacular. The company said the debut collection from its chief creative officer Riccardo Tisci had received an exceptional response.

The company also announced a 4% rise in revenue to £1.2bn, excluding the Beauty business which was sold last year. Adjusted operating profit rose 8% to £178m and the dividend was maintained at 11p. Store sales were up 3% in the second quarter and the crucial Asia Pacific region saw growth in the mid-single digits while the Middle East was weak due to macroeconomic factors.

The figures were slightly better than expected and Burberry’s CEO confirmed that the company was on track to achieve cost savings of £100m and meet expectations for both next year and 2020.

Despite a sharp drop in the share price over the past two months the shares have still outperformed the market so far this year, and they rose modestly again this morning in response to the results. With the forward price-earnings ratio looking more demanding we continue with our ‘hold’ recommendation for investors who are seeking a balanced return and willing to accept a medium to higher level of risk.

All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Ian Forrest portrait photo
Ian Forrest

Investment Research Analyst

Ian’s background in investments, financial journalism and research has seen him advising private investors on equities and helping to manage portfolios. His qualifications include the Certificate in Financial Planning and the Chartered Institute for Securities & Investment’s Investment Advice Diploma.