Burberry enjoy a rise in pre-tax profits

Burberry, the luxury goods retailer, has posted a substantial increase in this year’s pre-tax profits. 14% of this is attributed to the growth in Asian markets, where it has been increasing its presence. Although analysts had predicted profits of £415m, the group, well known for its camel, red and black checked-lined coats, posted a pretax profit of £428m for the year ending on 31 March.

Asia pacific, the largest region contributing 35% of the gross sales, had a 13% increase in sales revenue. The demand for its expensive products in china and Hong Kong were responsible for this surge. China, which contributes 14% of retail and wholesale revenue, posted a 20% increase in sales, after opening 11 new stores nationwide.

This increase signalled a revamp in sales after a warning last September after sales volume in China decreased. The group had said that the profit for the first half would be below that of last year as they shifted from wholesale markets, through non-Burberry stores, to retail outlets in Latin America and Asia. The retail sales are responsible for 71% of all sales revenue.

Last year, the profits for the six months ending September were pegged at £173m. The group, aims for a small increase on the 17.1% adjusted operating margin for the full year. They expect this to fall in the second half due to increased revenue generation.

The firm announced an expected decrease of 10% in their wholesale underlying revenue since it is reducing accounts in Europe and North America. They aim to increase their focus on the Asian and Latin American markets which have a high demand for their products due to their expanding economies.

10 Burberry stores will be opened this year, with three larger stores set up in Shanghai for locals and for domestic tourists. Burberry opened another 4 stores in Brazil, and entered franchise operations with companies in Colombia, Barbados and Chile.

There is a marked contrast in its growth in China, when compared to rivals such as Gucci, owned by French group PPR, and Louis Vuitton, owned by LVMH, both of which have posted poor performance in the region.