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LONDON — Profits at Burberry Group plc dipped 4.9 percent last year as a result of costs related to the brand's technology overhaul, Project Atlas.
Profits for the fiscal year ended March 31 fell to 106.4 million pounds, or $190.1 million, from 111.9 million pounds, or $206.6 million. Currency conversions were made at average exchange rates for the respective periods.
Before the Atlas-related costs, operating profits rose 2.7 percent to 165.6 million pounds, or $295.8 million, from 161.3 million pounds, or $297.8 million.
Turnover rose 3.8 percent to 742.9 million pounds, or $1.33 billion, from 715.5 million pounds, or $1.32 billion. The turnover figure, which had been released last month, has been slightly adjusted to reflect a change in the company's foreign currency translation method. From now on, the company will convert financial results every 30 days, based upon average exchange rates for each month.
"In a year of transition and investment, the group achieved solid financial results," said chief executive Rose Marie Bravo in a statement Thursday. "With a strong spring season underway, we enter our 150th year with confidence in Burberry's future."
It was Bravo's last round of financial results before she makes way for Burberry's new chief executive, Angela Ahrendts, in July.
Stacey Cartwright, chief financial officer, said the latest numbers were on track. "Underlying profit for the year was actually up 5 percent, and the decline was just due to costs linked to the preparation and initiation of Project Atlas," said Cartwright, who has been spearheading the project.
"By October, we're going to have global sales and stock transparency — which we've never had before," she added. "We'll be able to have early visibility on sales and stock trends, and frankly, I can't wait."
As reported, Project Atlas foresees investment of some $94 million during the first three years, generating cost savings in excess of $37.4 million annually by the project's third year in 2007-2008.
In terms of guidance for the current fiscal year, Burberry said it was expecting a "significant" negative exchange rate comparison, due to the weakening dollar. Atlas expenses are expected to be approximately 19 million pounds, or $36 million at current exchange, with savings and benefits amounting to 6 million pounds, or $11.2 million, in the current year. Licensing revenue is expected to be broadly flat, while first-half wholesale sales are up a low-single-digit percentage.