Burberry Sees Increased Uncertainty as Annual Profit Declines

LONDON, United Kingdom — Burberry Group Plc, the British maker of $1,895 trench coats and $22 nail polish, reported a 1 percent decline in annual earnings as the strength of sterling and decelerating sales in Hong Kong weighed on margins.

Adjusted pretax profit fell to 455.8 million pounds ($706 million) in the 12 months through March, Burberry said Wednesday. Analysts predicted 451.9 million pounds, according to the average of estimates compiled by Bloomberg. Excluding currency shifts, earnings rose 7 percent.

Burberry is relying on strong domestic and traveler demand in Europe and the U.S. as declining revenue in Hong Kong crimps growth in Asia. Currency shifts wiped 38 million pounds off last year’s profit. The pound has gained 13 percent against the euro and 10 percent against the yen in the past year.

"We are seeing increased uncertainty in some markets," Chief Executive Officer Christopher Bailey said in the statement as the company lowered its forecasts for this year's earnings due to currency shifts. Bailey added the CEO role to that of chief creative officer about a year ago, taking charge after Angela Ahrendts left for Apple Inc.

To make pricing more uniform across markets, the London-based company responded by lowering the price of some coats in China and raising select handbag prices in Paris, according to Sanford C. Bernstein.

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