British luxury goods group Burberry said cost cuts and demand for accessories helped limit a fall in first-half profit and lower stock levels would help it improve second-half profitability.
The 153-year-old company said today operating profit before one-off items fell 19 per cent at constant currencies to £86.3 million (€96.4 million) in the six months to September 30th, beating a forecast for £83 million.
The gross profit margin fell 30 basis points, better than expectations for a drop of at least 200 basis points and thanks largely to a cost-cutting programme which has seen the group shed over 1,000 jobs, or more than 15 per cent of its workforce.
Burberry tipped an improvement in second-half margins, helped by lower stock levels which would reduce the need to discount, and kept its other forecasts, which include a 15 per cent fall in wholesale revenues at constant exchange rates.
The interim dividend was up 4 per cent to 3.5 pence a share.
Luxury goods firms have been hit hard in the recession, though industry leaders LVMH, Richemont and Hermes have recently reported signs of recovery.
Burberry, known for its camel, red and black check, has fared better than most because it reacted quickly by slashing costs, jobs, stock and range assortments.
Its shares, which dropped as much as 70 per cent in 2008, have more than recovered their losses this year, outperforming the DJ Stoxx personal and household goods index by almost 120 per cent.
They opened at 595 pence today, valuing the business at about £2.6 billion.
Reuters