British luxury goods maker Burberry lowered its 2016 retail and wholesale profit guidance due to foreign exchange movements. As Ciara Lee reports it also said it was seeing increased uncertainty in some markets, taking the shine off forecast-beating results.
It's famous for its raincoats and Burberry may need them to weather a few black clouds. The 159-year-old luxury goods maker has lowered its retail and wholesale forecasts for 2016 because of foreign exchange movements. It follows the strength of the U.S. dollar, the weakness of the euro and the surge in the Swiss franc earlier this year. IG's Alastair McCaig. (SOUNDBITE) (English) ALASTAIR MCCAIG, SAYING: "Burberry have been maybe the template for UK clothing retailers to expand their sales out of the UK and onto an international arena. Certainly their ability to sell to Asia has been particularly impressive. That being said, the fluctuations in the currency markets have left them that much more open to those aspects." The currency fluctuations could shave up to 40 million pounds off the company's 2015-2016 profits. And shares fell by around five percent on the warning. The cautious tone came despite Burberry posting a 7 percent increase in underlying profits for the year to the end of March. The company says its focus on its British-made trench coats and cashmere scarves has been a principle driver of growth. Investment in digital also outperformed across all its regions.