Burberry Beats Estimates as Luxury Maker Battles Tough Backdrop

LONDON, United Kingdom — UK luxury-goods maker Burberry Group Plc reported first-half profit that beat analysts' estimates as cost savings helped offset slowing revenue growth.

Adjusted pretax profit in the six months through September rose 3 percent to 152.9 million pounds ($233 million), London- based Burberry said Thursday. Analysts predicted 144.2 million pounds, according to the median estimate compiled by Bloomberg.

Chief Executive Officer Christopher Bailey is cutting bonuses and consolidating products under one label as he grapples with slowing luxury demand in China. More Chinese people are shopping in Japan to take advantage of a weak yen and anti-extravagance measures at home, yet the maker of 1,995-pound trenchcoats only has six stores there.

“The external environment remains challenging and uncertain,” Burberry said in the statement. Comparable sales have improved in the third quarter compared with the second, and the company isn’t changing its outlook for mid single-digit percentage growth in comparable sales in the second half.

Phasing out the Prorsum, London and Brit labels by the end of 2016 will make it simpler for customers and more efficient for the business, Bailey said last week. Unifying the runway, formal wear and casual lines under the Burberry brand won’t affect pricing or the product range, according to the company.

The global market for personal luxury goods is heading for its most sluggish year since 2009 as a combination of stock market turmoil, a strong dollar and a commodity-price rout curb demand, according to Bain & Co. Burberry shares have fallen 18 percent this year, compared with a 4.1 percent decline for Britain's benchmark FTSE 100 Index.

By Andrew Roberts; editors: Matthew Boyle, Paul Jarvis.