Burberry says foreign exchange impact to fade

PARIS, France - British luxury brand Burberry said the impact of foreign exchange rates would fade after weighing on profit and sales in the first half of its financial year.

The fashion company, which has launched a high-profile Christmas campaign featuring 12-year-old Romeo Beckham, son of soccer star David and designer Victoria, said trading remained tough, "with pockets of weakness in Europe."

Burberry reported an adjusted profit before tax of 152 million pounds ($242 million) for the six months to Sept. 30, which was broadly in line with forecasts.

Foreign exchange rates shaved off 75 million pounds in revenue and 31 million pounds in profit in the first half but should become less of a factor.

"At current rates, we do not expect foreign exchange to have a material impact on underlying profits for the second half," Burberry Finance Director Carol Fairweather told a conference call with journalists.

Burberry said demand from the Chinese, which fell significantly in recent months, had not really improved while spending by the Russians, which have seen the value of the rouble collapse in the past week, also remained lower.

However, the company said it continued to trade better than many of its luxury rivals in China, where it bought out franchise partners three years ago.

Burberry shares were down 2.4 percent at 1492 pence by 0925 GMT.

The company proposed raising the interim dividend by 10 percent to 9.7 pence a share, which it said reflected its intention to move progressively to a 50 percent earnings payout level over the next three years.

The Christmas season is the first since Christopher Bailey took over as chief executive at Burberry, combining the role with that of chief creative officer.

Last week, Burberry took over Printemps' shop windows with interactive wifi-enabled gimmicks and displayed an array of trenchcoats, shoes and dresses exclusive to the Paris department store.

"We think we have never been better positioned for the festive period," Fairweather said.

1 US dollar = 0.6283 British pound