The British fashion house has suffered a fall in annual profits, but its ability to generate cash and make cost savings remains strong.
Editor’s Remarks: The weaker pound boosted Burberry’s domestic stores due to an increase in tourism and also caused positive foreign exchange effects on overseas earnings that amounted to £128m. However, exchange rates are expected to cost the company £30m next year. Furthermore, despite much improved operational cash flow, pre-tax profits fell 5% to £394.8m due to poor sales in the US. Overall, same-store sales across the globe increased by a paltry 2% in the last three months of the financial year, compared to 15% in LVMH’s fashion and leather goods division. It is hoped that incoming CEO Marco Gobbetti will revitalise the British brand’s fortunes, but many feel that unless Christopher Bailey steps down as creative director, little will change.