Burberry has booked double-digit growth in its half-year report while also announcing a store closure programme as part of a strategic overhaul.
For the six month period to September 30, the luxury fashion retailer recorded a 26 per cent rise in pre-tax profits to £128 million while operating profit increased 24 per cent to £127 million.
On an adjusted basis, pre-tax profit grew 28 per cent to £188 million while adjusted operating profit surged 28 per cent to £185 million.
Meanwhile, total revenues rose nine per cent – or four per cent on an underlying basis – to £1.26 billion during the first half.
This was boosted by a 10 per cent increase – or five per cent on an underlying basis – in retail sales, with like-for-like sales growing five per cent in the second quarter compared to four per cent in the first three months.
In its UK market alone, Burberry reported double growth, although there was a slowdown in the second quarter as tourist spend slowed with the annualisation of the sterling weakness.
However, it said that its Asia market was the star performer, boosted by “mid-teens percentage growth” in mainland China.
The brand’s direct-to-consumer online revenue also grew in all regions, led by growth of mobile transactions.
“I am pleased with our performance in the half, with strong double-digit underlying profit growth,” chief executive Marco Gobbetti said.
“Consumers responded positively to fashion and newness, particularly in rainwear and leather goods.
“Digital revenue grew in all regions, led by mobile, while growth was strongest in our own stores in Asia Pacific.”
Burberry used its half-year report to simultaneously announce a major strategy overhaul, which includes a store closure scheme and increased focus on luxury shoppers.
The plans are part of Gobbetti’s vision for the iconic British brand, in a bid to “sharpen” its positioning.
Burberry did not say how many stores it would “rationalise” or how many of its staff would be affected, but the closures will mainly affect its wholesale arm – which represents 30 per cent of the business – and will initially focus on the US and Europe.
This means Burberry close down department store concessions, and shops that are not found in or near communities of luxury shoppers.
The overhaul anticipated to cost the company £15 million.
“To ensure our distribution is consistent with our brand positioning, we will rationalise non-luxury wholesale and retail doors, with an initial emphasis on the US and then EMEIA (Europe, Middle East, India and Africa),” Gobbetti said.
He added: “Now is the right time for Burberry to implement the next phase of its transformation.
“By re-energising our product and customer experience to establish our position firmly in luxury, we will play in the most rewarding, enduring segment of the market.
“We have the foundations to build on and the team to execute our plans. This will enable us to drive sustainable growth and higher margins over time, whilst continuing to deliver attractive returns to shareholders.”
The news comes a week after Burberry confirmed that former boss and chief creative officer Christopher Bailey will step down from the board next year, ending his 17-year stint with the brand.