Burberry Group, the UK's largest luxury-goods maker, said earnings at its nascent beauty business will be less than half its original forecast this fiscal year.

The division, which Burberry has controlled directly since April, will earn about £10 million, the London-based trenchcoat maker said yesterday, down from an earlier projection of about £25 million. Burberry also reported little-changed first-half earnings and revenue that topped £1 billion for the first time.

Switching the beauty unit to direct control from a licensing agreement has more than doubled the group’s marketing spending, according to Burberry, which plans to introduce a new women’s fragrance in February. The firm said that operating profit margins will probably show a “modest increase” this year. – (Bloomberg)