Burberry’s profits collapsed as Chinese consumers turned away from luxury retail earlier this year.
The fashion brand’s pretax profit fell 40 percent last year to £383 million ($483 million) as of March 30, with underlying profit also falling 34 percent.
In the year to the end of March, operating profit fell 36% to £418 million.
Comparable sales fell 12% in the final quarter, while revenue fell 4% to £2.9 billion.
In the company’s key Asia-Pacific region, sales fell 17 percent in the fourth financial quarter, and the number of Chinese customers fell 12 percent compared to the same period last year.
Burberry warned that it expects wholesale sales to fall by around 25 percent in the first half of this year.
The company also said it expects currency headwinds of around £30 million to revenue and £20 million to profit next year due to exchange rate changes.
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Chief Executive Officer Jonathan Akeroyd said that while financial results fell short of the company’s original expectations, good progress had been made in repositioning the brand.
Yanmei Tang, analyst at Third Bridge, said: “Burberry is one of the brands affected by the slowdown seen across the luxury industry, with upscale customers becoming more selective in their purchases.
“Our experts say Burberry is struggling to clearly define and enhance its brand identity, resulting in confusing messaging and low sales growth. There is too much reliance on a new creative direction rather than making operational changes.”
Imperial Brands (IMB.L)
The tobacco group Imperial Brands confirmed its outlook for the full year despite a decline in interim profit and sales.
Sales of Imperial’s NGP brands, which include Pulze hot tobacco and Blu e-cigarettes, rose 16.8%. The company also increased its interim dividend by 4% to 44.90p.
Reported revenue fell 2.3% to £15.1 billion in the six months to 31 March, while operating profit fell 2.6% to £1.5 billion.
The company said tobacco prices had risen by 8.6 percent, more than offsetting the decline in volumes.
Next-generation products (NGPs) such as vaping and heat-not-burn saw sales increase by 16.8%, with strong growth in Europe, Africa and Asia-Pacific. Sales in the US fell by 10.3%.
“The price measures taken in the tobacco sector in the first half of the year and the good momentum at NGP make us confident that we will be able to achieve results for the full year that are in line with our forecasts,” said CEO Stefan Bomhard.
Boeing (BA)
Boeing shares fell in premarket trading after reports emerged that the company could face criminal prosecution in the U.S. over the 737 MAX plane crashes that killed 346 people.
The U.S. Department of Justice (DOJ) had filed a lawsuit accusing the aircraft manufacturer of violating its obligations under a 2021 agreement that protected Boeing from criminal prosecution in connection with the crashes.
A total of 346 people were killed in the crashes – one in Indonesia in 2018 and another in Ethiopia in 2019.
US authorities said in their letter that Boeing had violated its obligations under a Deferred Prosecution Agreement (DFA) by “failing to develop, implement and enforce a compliance and ethics program to prevent and detect violations of the US fraud laws in all of its operations.”
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The public prosecutor’s office will inform the court by July 7 at the latest how it intends to proceed, the Ministry of Justice said.
Boeing’s aircraft safety remains under intense scrutiny after an unused door on a new 737 Max jet broke loose shortly after takeoff in January, leaving a gaping hole in the side of the plane.
Oracle (ORCL)
Oracle shares rose before the market open after news that the company is close to signing a $10 billion cloud deal with xAI, Elon Musk’s AI startup.
The deal, first reported by The Information, involves leasing cloud servers from Oracle. This makes xAI one of Oracle’s largest customers and a major competitor in the AI landscape alongside OpenAI and Google.
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Last September, Oracle Chairman Larry Ellison announced that the company had signed a deal to provide cloud infrastructure for xAI to train its artificial intelligence models. At the time, Ellison did not disclose the value or duration of the deal.
However, according to current reports, the transaction will last for five years and be worth $10 billion.
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