November 14, 2013 / 7:24 AM / in 4 years

Burberry first-half profit meets guidance

A mannequin is displayed in a window of Burberry's in central London May 28, 2008. REUTERS/Luke MacGregor

LONDON (Reuters) - British luxury brand Burberry (BRBY.L) met forecasts for flat profit in a first half period that saw revenue exceed 1 billion pounds ($1.6 billion) for the first time.

“We remain focused on executing our retail, digital and marketing strategies in the all-important third quarter and in what remains an uncertain macro environment,” Chief Executive Angela Ahrendts said on Thursday.

The update was the first from the group since it said last month that Ahrendts would step down by mid-2014 to take up a new position with Apple (AAPL.O) and be succeeded by Christopher Bailey who will also retain his chief creative officer role.

Some Burberry investors reacted cautiously to Bailey’s promotion arguing his two roles would not sit easily together.

However, though shares in the firm have fallen 9 percent over the last month, they are still up 19 percent so far this year. They closed Wednesday at 1,462 pence, valuing the business at 6.42 billion pounds.

The 157-year-old group, best known for its camel, red and black check pattern, made a profit before tax and one-off items of 174 million pounds in the six months to September 30.

Last month Burberry forecast a first-half profit around the level of the prior year’s 173 million pounds.

Total revenue rose 17 percent to 1.03 billion pounds, driven by a 20 percent increase in retail revenue to 695 million pounds.

Burberry, which ended the period with net cash of 208 million pounds, is paying an interim dividend of 8.8 pence, up 10 percent.

For the full 2013-2014 year it expects new openings to contribute low to mid single-digit percentage growth to retail revenue.

It expects underlying wholesale revenue, excluding beauty, to increase by a mid to high single-digit percentage in the six months to March 31.

The beauty division is expected to deliver wholesale revenue of about 140 million pounds and incremental retail/wholesale profit of around 10 million pounds in the full year.

Burberry also forecast a modest rise in the retail/wholesale operating margin from the 17.1 percent achieved in 2012-13. ($1 = 0.6254 British pounds)

Reporting by James Davey; editing by Kate Holton and Paul Sandle

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