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Burberry faces €181m bill to end perfume agreement Burberry faces €181m bill to end perfume agreement
(40 minutes later)
Burberry has kicked up a stink in its relationship with perfume maker Interparfums by serving notice on the French company that makes its fragrances and beauty products, in a move that will cost €181m (£142m).Burberry has kicked up a stink in its relationship with perfume maker Interparfums by serving notice on the French company that makes its fragrances and beauty products, in a move that will cost €181m (£142m).
The British fashion brand has told Interparfums, which owns the licence to make its Burberry Body perfume, that it intends to terminate the agreement on 31 December. However, industry sources said it was a precautionary move as talks, related to a revamp of the fragrance and beauty business, head towards an end-of-month deadline. "Burberry has served notice of its intention to terminate the licence agreement with effect from 31 December 2012. Upon termination at 31 December 2012, Burberry would pay Interparfums approximately €181m in cash," said the company. The British fashion brand has told Interparfums, which owns the licence to make its Burberry Body perfume, that it intends to terminate the agreement on 31 December. However, industry sources said it was a precautionary move as talks, related to a revamp of the fragrance and beauty business, head towards an end-of-month deadline. As a consequence, Burberry has had to lay the ground for a future without Interparfums in case talks fail. "Burberry has served notice of its intention to terminate the licence agreement with effect from 31 December 2012. Upon termination at 31 December 2012, Burberry would pay Interparfums approximately €181m in cash," said the company.
Analysts at Seymour Pierce played down the significance of the announcement as Burberry shares shed 5p to 366p – a decline of 0.4%. "We believe this will turn out to be a non-event. We continue to regard Burberry as a strong long-term growth story and with significant geographical and product mix opportunities," said Kate Calvert, a Seymour Pierce analyst.Analysts at Seymour Pierce played down the significance of the announcement as Burberry shares shed 5p to 366p – a decline of 0.4%. "We believe this will turn out to be a non-event. We continue to regard Burberry as a strong long-term growth story and with significant geographical and product mix opportunities," said Kate Calvert, a Seymour Pierce analyst.
In May the famous trenchcoat maker announced a store opening spree in Brazil and Mexico as part of a £200m expansion programme which includes moving existing stores to larger sites. Burberry's chief executive, Angela Ahrendts, said at the time that the company would continue to invest despite weak sales trends in the US and Europe, and fears that China is on the cusp of a serious slowdown. Last year Burberry's pre-tax profits rose by 26% to £376m, while sales increased by 24% to nearly £1.9bn. In May the famous trenchcoat maker announced a store opening spree in Brazil and Mexico as part of a £200m expansion programme which includes moving existing stores to larger sites. Burberry's chief executive, Angela Ahrendts, said at the time that the company would continue to invest despite weak sales trends in the US and Europe, and fears that China is on the cusp of a serious slowdown.
Last year Burberry's pre-tax profits rose by 26% to £376m, while sales increased by 24% to nearly £1.9bn. The company has described the Burberry Body range, which retails from £33, as its "most successful fragrance launch to date", backed by a global digital and outdoor advertising campaign.