LONDON – Burberry kept a lid on costs in the first half, sending profits up 42 percent to 132 million pounds as the company touted the early success of Riccardo Tisci’s first collection for the brand.
Revenues in the six months to September 26 dipped 3.4 percent at current exchange rates and 2 percent at constant exchange to 1.22 billion pounds.
Stripping out the impact of the beauty business, which was formerly in-house and is now a license with Coty, first-half revenue was up 3 percent at reported exchange and 4 percent at constant rates. Both profit and revenue figures beat analysts’ projections.
In a statement Thursday, the company said it witnessed an “exceptional response” to Tisci’s new creative vision, including his re-branding and his first collection that showed during London Fashion Week in September.
Burberry added that its new “go-to-market model” of monthly drops, capsule collections and social selling also contributed to building brand heat.
“We are energized by the early results as we begin to transform and reposition Burberry,” said chief executive officer Marco Gobbetti, adding that the initial response from customers and the industry to Tisci’s vision has been positive.
“Mindful that we are only in the first phase of our multi-year plan, we continue to manage dynamically through the transition. We confirm our outlook for the full year.”
After seeing strong wholesale growth in the first half following a strategy to tighten operations, the company said wholesale revenue is now expected to be up by a mid-single digit percentage. The anticipated growth from luxury accounts more than offset the rationalization of the business, Burberry said.
Full-year licensing revenue will rise by 15 million pounds, including beauty, with that figure partly offset by the non-renewal of the watch license. Burberry said it is expecting to report cumulative cost savings of 100 million pounds in the 2018-19 fiscal year, an incremental 36 million pounds on the previous period.