Burberry Profit Drops as Luxury Maker Fails to Match Peersby
Earnings meet estimates as LVMH, Kering and Hermes all beat
Burberry says it’s on track to meet financial goals for year
U.K. luxury-goods maker Burberry Group Plc reported a drop in first-half profit that met analysts’ estimates, failing to match rivals that reported better-than-expected results.
Adjusted pretax profit fell 4 percent to 146 million pounds ($182 million) in the six months through September, the London-based company said Wednesday. Analysts expected 145.3 million pounds. The drop was 24 percent excluding currency shifts.
The numbers contrast with those of LVMH, Kering SA and Hermes International SCA, which all beat estimates in their latest reporting periods. The British trench coat maker is grappling with ebbing demand in key luxury hubs like Hong Kong, though like its peers has seen some improvement in recent months. Sales in Asia Pacific rose by mid-single digits in the second quarter, but were still negative in the first half.
“Burberry didn’t make an emphatic regional call around markets such as Greater China, where most brands are flagging a pick up in growth,” said John Guy, an analyst at MainFirst Bank AG. “Sales growth in mainland China appears to be softer relative to peers.”
Burberry shares fell 3.4 percent to 1,430 pence at 8:06 a.m. in London, more than the decline in the broader market after Donald Trump was elected U.S. president.
Burberry said it’s on track to meet its financial goals for the year. The company also said it will start an additional 50 million-pound share repurchase once the current buyback of 100 million pounds is completed, adding that it bought back 34 million pounds in the first half.
The luxury-goods maker repeated that the weakness of sterling will add about 125 million pounds to full-year profit, based on recent exchange rates.