LONDON, UK: British luxury clothing and accessories firm Burberry on Wednesday said its net profits slumped by more than a quarter in the group's first half following a sizeable one-off charge.
Burberry said profit after tax dropped to £85m in the six months to September compared with net earnings of £117.2m in the first half of its 2011/12 financial year.
The group was hit by a one-off charge of £73.8m related to the termination of a fragrance and beauty licence deal. Burberry had warned that its second-quarter earnings were hurt by the slowdown in China.
The company, famous for its trench coats and trademark red, camel and black check design, said that profit before tax and exceptional items grew by 7.0% to £173.4m during its first-half.
That beat analysts' consensus forecast of £169m, according to a survey by Dow Jones Newswires. Revenues were up by 6.0% to £882.5m.
"Given the company's leverage to China, either directly or through Chinese tourists visiting Europe, we see the recent improvement in Chinese economic data as very positive for Burberry's prospects," Dolmen stockbrokers said in a note to clients.
Burberry plans to bring its perfume business in-house early next year following the end of its licence relationship with French company Interparfums.
"Integrating fragrance and beauty is a significant brand and business opportunity," Burberry chief executive Angela Ahrendts said.
"One consistent brand expression, leveraged across all categories, will underpin future growth in the beauty division and our existing core business," she added.
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