Burberry profits could be hit by exchange rates

Burberry has recorded a strong rise in sales in the second quarter of the year.


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By :  ,  Financial Analyst

Burberry has warned that unfavourable exchange rates could impact on its positive sales figures.

The UK luxury fashion brand has enjoyed a highly successful second quarter of the year with retail revenues growing by ten per cent to £370 million in the three months to the end of June. Like-for-like sales were also up by 12 per cent with the company performing exceptionally well in Asia with sales growing in China and Hong Kong.

Despite the positive figures, Burberry has warned that if exchange rates remain the same both its retail and wholesale profit could be cut by £55 million. The main focus is the sterling-yen exchange rate which, if moved, the company could expect licensing revenue to drop by around £10 million. The current exchange rate stands at 173.51 Japanese yen to the pound and any movement could impact Burberry's operating revenues.

Christopher Bailey, chief executive of Burberry, said: "The first quarter performance reflects our focus on striving to give customers the best possible experience of the Burberry brand through ongoing investment in retail, digital and service, both on and offline.

"With great brand momentum and a focused vision, we remain confident of delivering sustainable, profitable growth into the future."

Burberry has made considerable strides across the world with the company reporting double-digit sale growth in the US and Asia Pacific markets while it was also performing well in Europe, the Middle East and Africa.

The figures come at a good time for Burberry which has been facing a backlash from shareholders over the pay and perks package collected by Mr Bailey. Investors are set to meet today (July 11th) with 30 per cent expected to oppose the new plans which would provide the chief executive with around £27 million.

However, the 12 per cent sales increase could help to calm shareholders.

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