Burberry’s stock is absolutely tanking this morning despite the luxury fashion retailer posting an 11% surge in revenue for the year ending March 31, 2015.
Sales hit £2.5 billion ($US3.9 billion) and adjusted profit before tax shot up 7% to £456 million ($US706 million). It said British-made trench coats and cashmere scarves were the “principal drivers” of its revenue climb.
However, shares fell by over 5% in the opening trading session. This is because, actually, foreign exchange rates had an adverse effect on profits, which fell 1% when you take the £38 million ($US59 million) impact into account.
In other words, the surge in the Swiss franc, the strength of the U.S. dollar, and the weakness of the euro hurt the company. Burberry added that the massive currency fluctuations will continue to impact the group all the way into 2016 and therefore it predicts that profits will be £40 million ($US62 million) lower than it previously anticipated.
“We are pleased to report a strong full year performance, with revenue up 11% and adjusted profit up 7% underlying,” said Christopher Bailey, Chief Creative and Chief Executive Officer, at Burberry. “Against a challenging external backdrop, our global team has focused ever more intensely on our core, including celebrating the British-made products that are our brand signature and extending our online and offline integration.
“At this early stage of the year, we are seeing increased uncertainty in some markets. Against this background, we will continue to manage our business dynamically – capitalising on the significant opportunities we have by channel, region and product to create long-term shareholder value.”