Burberry saw half-year profits slump 24% as the benefits of a weaker pound after Brexit were offset by pain in its wholesale and licensing business.
The company reported underlying pre-tax profit of £146 million in the six months to September 30, down from £151.7 million over the same period last year.
Revenue at constant currencies dropped 4% to £1.16 billion. However, when accounting for currency fluctuations, revenue rose 5%.
The luxury fashion firm said retail growth was led by strength in the company’s UK division, where like-for-like sales spiked 30% as tourists flocked to London to take advantage of the drop in sterling in the second quarter.
But that growth was “offset by declines in wholesale and licensing, in part reflecting actions to build and reinforce luxury brand positioning”, Burberry said.
The company intends to move its 800 workers in Castleford and Keighley, where the gabardine fabric is woven, to a new state-of-the-art manufacturing and weaving facility in Leeds.
Burberry is spending over £50m on the new facility, situated on the South Bank of Leeds, which will employ more than 1,000 people when it is completed in 2019
The company explained that wholesale licensing income was hit by the planned expiry of a raft of licences in Japan, which accounts for more than half of that division’s revenue.
Overall licensing profit dropped 53% to £11 million.
Global sales took a hit, with Asian and American like-for-like retail sales dropping by a “low single-digit percentage” while growth in Europe saw low single-digit sales growth in in the first half, aided by UK tourist spending.
The company closed 24 stores and concessions globally in the first half of the year, partially offset by 11 openings.
It comes as the company embarks on a strategic turnaround plan that has included simplifying their product line, revamping its digital store and cutting costs by as much as £20 million over 2017.
Chief executive Christopher Bailey from Halifax said: “In May we outlined plans to evolve how we work as a business and to drive Burberry’s future growth in a rapidly-changing luxury environment.
“Since then, we have made good early progress towards realising the significant opportunities ahead of us as we begin implementing our five strategies. We remain on track to deliver our financial goals.”