LONDON — Exceptional items related to Burberry’s initial public offering last summer took a bite out of the luxury company’s bottom line in the fiscal year ending March 31, while its short-term outlook is clouded by the downturn in travel and other current events.

Burberry said Thursday that its net profits slid 7.6 percent to $85.6 million from $92.7 million last year. Diluted earnings per share dropped 7.2 percent to 17 cents from 18 cents.

As reported, Burberry breezed past its revenue targets for the year, thanks to a 22.4 percent spike in second-half revenue. Total sales for the year rose 18.9 percent to $973.5 million from $818.7 million.

Excluding IPO charges — linked to employee share ownership plans — the company’s net profit for the year would have vaulted 23 percent to $114 million from $92.7 million. Before the IPO-related items, diluted EPS rose 23.4 percent to 23 cents from 18 cents.

The IPO-related items included a $36.1 million exceptional charge related to the company’s employee share ownership plan, and a $3.8 million pre-IPO foreign exchange loss before attributable tax relief of $11.5 million.

All figures are converted from the pound at current exchange rates.

Thursday’s figures were broadly in line with analysts’ expectations.

“This has been a remarkable year for Burberry,” said John Peace, Burberry’s chairman. “We have ended the year with an excellent set of financial results, well ahead of market expectations at the time of the IPO.…Behind this are a strong management team, a clear strategy and many opportunities for future growth.”

Current trading, however, is not as robust as last year, although Burberry said in a statement it expected to meet current consensus profit expectations for the year to March 31, 2004.

The company added that since March, retail results have been impacted by external events. While underlying revenue has shown continued growth, comparable store performance has been “modestly” negative.

Burberry said it expected high-single-digit sales growth for the wholesale business for fall 2003, although the company anticipates the current environment may affect the spring 2004 season, where initial orders are taken in the quarter to September 2003.“I don’t think there’s a retailer out there that’s not affected by travel,” Rose Marie Bravo, Burberry’s chief executive, told WWD in a telephone interview. “The decline in travel, the empty airports, the impact on duty free impacts us all. When people don’t travel, it also makes a big difference in the stores. Foreigners lend stores a certain energy and we’re really missing that.”

Bravo said she was upbeat about the second half of the company’s current fiscal year. “There was a softening in the fourth quarter of last year and we’re seeing that continuing. These are tumultuous times and I think everyone is in the same boat. We’re all expecting to come out of the lull — barring any other disasters — and have a more positive fall season,” she said.

In the meantime, Bravo said Burberry is doing everything it can to keep an eye on numbers and create excitement around the brand.

Operating profits for the year rose 3.4 percent to $144.8 million from $140.1 million, while gross profit rose to $545 million, or 56 percent of sales, from $411.8 million, or 50.3 percent of revenue.

EBITA, operating profit before interest, taxation, exceptional items and goodwill amortization, increased by 29 percent to $191.4 million from $148.1 million.

All Burberry product categories registered an increase in sales. Women’s wear rose 19.8 percent to $324.6 million from $270.9 million, while men’s wear rose 8.9 percent to $267 million from $245 million. Licensing revenue grew 8.9 percent to $95.6 million from $87.7 million.

Accessories, by far, was the fastest-growing category, with sales leaping 34.7 percent to $278 million from $206.3 million. Accessories now account for 29 percent of the company’s revenue, an indication of how far Bravo and her team have brought the brand in the last four years. Prior to her arrival, Burberry was heavily focused on outerwear and its accessories business was relatively small. In addition, it had been seen as more of a men’s wear than women’s wear brand, which Bravo clearly has reversed.

Bravo said she was particularly happy with the growth in the accessories business. “I think we have a nice merchandise balance now; it was a good goal for us to reach.” She added that the accessories business was powered, in part, by gift giving. “I think our New York store has become a gift destination — and it crosses all generations. The price points are right, and we pay a lot of attention to packaging, service and gift wrapping.”She added that “icon evolution” was another reason behind the accessories boom. “We’re doing things like taking the duffle and making it kid’s size,” she said, adding that the classic checked scarf evolved into the happy scarf, and later the striped model and the mile-long model. “It’s about evolving the icon while keeping to Burberry’s roots,” she said.

The Asia Pacific region saw the biggest spike in growth, thanks to Burberry’s control of its Asian operations outside Japan. As reported, Burberry acquired the operations of its primary distributors in Asia, excluding Japan, in January 2002 and July 2002. Sales in that region grew 46.9 percent to $241.1 million from $164.2 million.

Sales in North America grew 27.1 percent to $230.4 million from $181.2 million, thanks to a jump in wholesale and retail sales. Sales in Europe rose 5.6 percent to $496.4 million from $470.2 million.

Because of a slew of new store openings in the U.K., Europe and the U.S., and the Asia acquisitions, Burberry’s retail sales leaped 45.6 percent to $374.6 million from $257.3 million. The company opened 12 new and refurbished locations during the year. In total, retail selling space increased by about 37 percent in fiscal 2003.

The company plans to increase retail selling space by about 10 percent this year with the opening of eight stores, including a store in Milan — Burberry’s first unit in Italy — as well as three more stores in the U.S.: the Houston Galleria; Tyson’s Corner in Washington, D.C.; and The Forum at Caesar’s Palace in Las Vegas.

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