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Halifax chief of Burberry sees profit hit record

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Burberry’s new chief executive, Halifax-born Christopher Bailey, announced record sales and profits at the iconic global fashion brand and pledged to lead the group “in my own way” as he outlined plans to branch out into beauty products and the Japanese market.

Mr Bailey, who is credited with transforming the group’s fortunes alongside former CEO Angela Ahrendts, is keeping his role as chief creative officer, raising fears he could be taking on too great a workload.

But Mr Bailey insisted he is more than capable of performing both functions.

He told analysts: “As you know, my new role is an unconventional one corporately, and my background is not that of a traditional CEO.

“As such, I will lead Burberry in my own way, but always guided by a passion for what this unique brand stands for, by a desire to take the business from strength to strength and by a tremendous pride in building its distinctive culture.”

Mr Bailey formally took over his new role at the beginning of this month, completing a six-month transition period working alongside a new top team of executives.

“During this time I’ve been able to put the right team and structure in place for the next phase of Burberry’s evolution,” he said.

“The performance of the business in the second half is testament to how our teams responded during this period, remaining focused and executing brilliantly.”

The 158-year-old firm, best known for its camel, red and black check pattern, reported an eight per cent rise in pre-tax profits to £461m in the year to March 31.

This was on the back of a 17 per cent surge in sales to £2.33bn.

Revenues were driven by an 11 per cent jump in sales in China and strong sales of large leather goods, menswear and outerwear, which includes the brand’s signature trench coats, which are made in Castleford.

Burberry’s CFO Carol Fairweather said the firm is very proud of its Yorkshire heritage.

The group recently doubled its capacity at Castleford due to general growth in production needs and the introduction of Burberry Bespoke and the 24-hour production line.

Burberry’s manufacturing sites at Castleford and Burberry Mill now employ 700 people between them.

“We are delighted with our presence in Yorkshire,” said Ms Fairweather, adding that the group will “keep under review” plans to open a Burberry in Mr Bailey’s native Yorkshire.

The group currently has stores in London, Manchester and Birmingham.

Asked how Mr Bailey plans to lead Burberry in the future, Ms Fairweather said: “He is using the experts around him. There will be no change in strategy.

“The numbers we’ve posted are a testament to the strength of the team.”

Mr Bailey said: “We are particularly proud of the 12 per cent increase in our comparable store sales, reflecting our ongoing focus on driving productivity and brand awareness through the retail channel, both on and off- line.”

Mr Bailey hopes to quadruple revenue in Japan by 2017 as the expiry of third-party sales licences gives the company a free rein to expand in the world’s second-largest luxury goods market.

Burberry is in the process of taking back control of important parts of the business from licensed vendors who sell its goods.

The Japanese licence expiry in June next year will be the final step in the strategy and a major test for Mr Bailey.

Burberry’s four stores, 10 concessions and small wholesale business in Japan generated £25m of revenue this year, but failed to make a profit, giving the firm great scope for future earnings.

Mr Bailey’s potential £10m pay package will partly depend on him meeting ambitious goals to develop the Japanese business and making money from make-up, skincare and fragrance.

Burberry aims to become a top ten luxury player in beauty products. The firm repeated a warning that if foreign exchange rates remain at current levels there will be a material impact of around £40m on 2014-15 profits.

 

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