Britain's Burberry has reported a 21 percent underlying drop in full-year pretax profit due to weak demand in the United States, underlining the challenge facing Marco Gobbetti when he takes over the top job in July. Ciara Lee reports
It's known for its trademark trenchcoats and distinctive fabric. But Burberry is trying to refresh its product range and improve performance. That goal is all the more pressing now as the British luxury brand reports a 21 percent drop in full-year pre-tax profit, with weak demand in the U.S. being partly blamed. But over the past year Burberry has benefited from a drop in the value of the pound following the UK's vote to leave the EU, boosting operating profits by nearly 130 million pounds. For the full year, adjusted pretax profit came in at 462 million pounds - up 10 percent on a reported basis - but down 21 percent when the impact of currency is stripped out. And that currency boost is expected to reverse this year, potentially hurting other British firms too. (SOUNDBITE) (English) CCLA, CHIEF INVESTMENT OFFICER, JAMES BEVAN, SAYING: "I certainly anticipate that currency will be a major determinant of corporate profit and loss and therefore by extension reported earnings per share. And it is very clear that the currency is likely to remain volatile not least because of uncertainties on Brexit but also because the principal currencies against which the pound trades are themselves subject to considerable uncertainty." It maps out a challenging road ahead for incoming CEO Marco Gobbetti who takes over in July. He wants to improve performance in stores, where Burberry delivers less sales than rivals. Christopher Bailey - currently in charge of both creative and executive duties - says it's been a year of "transition" in a fast changing luxury market.