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Burberry reports growth in second-quarter sales despite Hong Kong disruption

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By Reuters
Burberry reports growth in second-quarter sales despite Hong Kong disruption
FILE PHOTO: People queue outside a Burberry store on Regent Street, London, Britain September 17, 2018. REUTERS/Henry Nicholls/File Photo   -   Copyright  Henry Nicholls(Reuters)

BARCELONA (Reuters) – British luxury brand Burberry <BRBY.L> said the popularity of collections by designer Riccardo Tisci boosted sales in its second quarter, helping offset double-digit declines in Hong Kong where trading has been impacted by protests.

Burberry, famous for its trench coats, reported first-half revenue of £1.28 billion, up 3% in constant exchange rates. Comparable store sales in the second quarter rose 5%, a step up from 4% in the first, it said on Thursday.

Chief Executive Marco Gobbetti is moving Burberry further upmarket in the luxury segment by refreshing product ranges under Tisci and focusing on premium store locations in markets such as the United States.

He said Burberry remained on track to deliver the first phase of his strategy, with a positive response from customers to Tisci’s designs.

“We delivered financial results in line with guidance despite the decline in Hong Kong and we confirm our outlook for FY 2020,” he said.

The company said it still forecast broadly stable top-line growth and adjusted operating margin for the year, despite incremental pressure on gross margin from the disruptions in Hong Kong.

First half adjusted pro forma operating profit declined 4% at constant exchange rates to £187 million. That reflected pressure on gross margin resulting from investment into product quality and deeper discounts on older product lines as well as £14 million of store impairments relating to Hong Kong.

(Reporting by Paul Sandle, editing by James Davey)