Burberry’s adjusted operating profit totalled £438 million (US$561.7 million) in the period, down -6% on a reported basis. Gross margin was down 100bps and said to have been negatively impacted by foreign exchange rate fluctuations and “growing investment in product, whilst operating expenses benefited from incremental cost savings of £41 million (US$52.57 million), ahead of plan”. Adjusted operating margin was 16.1%, down -100bps as reported, while reported operating profit stood at £437 million (US$560 million), +7% after adjusting charges of £1 million (US$1.28 million), against £57 million (US$73.1 million) in the corresponding period of 2018.

A “low single digit percentage growth” was recorded across all the key geographic regions, as well as in China. In terms of product category, Burberry says customers “responded positively” to new bags as the brand continued to “build out a fuller leather goods architecture”. However, the overall category performance was impacted “by softness in older lines”, according to Burberry. Continuing to upgrade its retail distribution network in the year to March, a total of 18 stores were closed, of which seven mainline, nine concessions and two outlets. Digital growth is said to have been mainly driven by Asia, mobile and new third-party relationships. On a reported basis, wholesale revenue was up +7%, excluding Beauty.

Burberry says it is still in its “multi-year journey” to transform and reposition the brand. The British label aims to rationalise and invest in its distribution network and “manage through the creative transition”, after which it intends to accelerate and grow. The Company confirms its guidance for “broadly stable revenue” and adjusted operating margin at constant rates in FY 2020.