By Cristina Roca
Burberry Group PLC on Thursday reported higher pretax profit and revenue for its first fiscal half, but struck a cautious tone for the rest of the year, warning that Hong Kong protests should continue to drag its performance.
The British luxury-goods company /zigman2/quotes/205386705/delayed UK:BRBY +2.91% posted pretax profit of 193 million British pounds ($247.9 million) for the period, up from GBP174 million the year previous and beating expectations of GBP174 million, according to a consensus estimate by four analysts provided by FactSet.
The luxury label, known for its iconic tartan print, said revenue rose 5% to GBP1.28 billion, slightly better than a 1.26 billion pound consensus estimate by six analysts provided by FactSet.
At constant exchange rates, sales rose 3%, Burberry said. Retail comparable store sales rose 4% for the first half ended Sept. 28, growing by 4% in the first quarter and 5% in the second quarter, Burberry said. This metric is closely watched by investors for signs of improving momentum at the brand, which is in the middle of executing a turnaround plan.
Burberry said its revenue was dragged by a double-digit drop in revenue in Hong Kong, where protests hurt sales.
The company cut its gross margin view to fiscal 2020, saying it now expects a 150-basis-point decline, from a 100-basis-point decline previously, as it continues to see disruptions in the higher-margin Hong Kong market.
Burberry backed its fiscal 2020 targets of stable revenue and adjusted operating margin at constant exchange rates.
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