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Burberry Profit Tops Estimates as Beauty Unit Forges Solo Path

Brit Rhythm Woman campaign star Suki Waterhouse | Source: Burberry
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  • Bloomberg

LONDON, United Kingdom — Burberry Group Plc, the U.K.'s largest luxury-goods maker, reported full-year profit that topped analysts' estimates as it took control of its beauty business and focused on outerwear.

Adjusted pretax profit rose 8 percent to 461 million pounds ($776 million) in the 12 months ended March 31, London-based Burberry said today in a statement. Analysts predicted 450 million pounds, according to the average of 18 estimates.

Burberry is partnering with Amazon.com Inc. and Alibaba Group Holding Ltd.'s Tmall.com for online sales to boost revenue from Brit Rhythm fragrances and other beauty products. The company also plans to take control of its Japanese business when a license expires there next year. Chief Executive Officer Christopher Bailey will update analysts on Burberry's plans for its beauty unit and Japan at a presentation today.

Burberry repeated today that wholesale revenue from beauty, which it took in-house last year, will grow about 25 percent at constant exchange rates in fiscal 2015. The company, which has hired executives from companies including Procter & Gamble Co. and Chanel to help manage the business, aims to be a top-10 beauty brand, which would require a more than fivefold increase in sales.

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The pound’s appreciation against other currencies could hurt 2015 profit, Burberry also said last month. New space will contribute “low to mid single-digit percentage” growth to total revenue, the company said at the time.

Burberry shares fell 0.1 percent to 1,515 pence in London yesterday, giving the maker of 3,995-pound trenchcoats a market value of 6.7 billion pounds.

By Andrew Roberts; Editors: Celeste Perri, Robert Valpuesta, Kim McLaughlin

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