British luxury goods group Burberry beat third-quarter revenue forecasts, helped by heavy discounting, and said it would cut around 540 jobs in Britain and Spain to protect profit in tough trading conditions.
The 153-year-old maker of upmarket raincoats and handbags said today revenues rose 9 per cent at constant exchange rates to £329 million ($477 million) in the three months to December 31st.
This compared with first-half growth of 13 per cent and forecasts of £270 million to £298 million, according to a Reuters poll of nine analysts.
Burberry said full-year adjusted profit would be in line with guidance it gave in November and that around £50 million of cost cuts would underpin profit in 2009-10.
Retailers across the world are struggling as consumers cut spending amid fears of a deep recession and job cuts.
Richemont, the Swiss group behind Cartier jewellery, missed third-quarter sales forecasts yesterday, while German retail giant Metro unveiled a cost cutting plan on today.
Burberry, known for its camel, red and black check, said like-for-like retail sales fell 3 per cent in its third quarter.
"Revenue benefited from strong promotional activity, especially in December," it said. "This impacted the gross margin but enabled profitable clearance of excess stock. These trends are expected to continue into the fourth quarter."
Burberry said it planned to cut 250 jobs in its underperforming Spanish market, and close a sewing plant in Rotherham, northern England, resulting in up to 290 job losses.
Production and investment will be focused in nearby Castleford, where Burberry's iconic trench coats are made.
The group, which has 116 stores, 253 concessions and 76 franchised stores across the world, said the cost of its restructuring plan would be up to £60 million.
Burberry shares have underperformed the European DJ Stoxx personal and household goods sector by 38 per cent over the past year. They closed yesterday at 205.75 pence, valuing the business at about £926 million.
Reuters