United Kingdom : Burberry to Cut Chiefs Bonus After Fall in Sales

Rose Marie Bravo, the Burberry chief executive and Britain’s most highly paid woman, is to lose some of her bonus after the company admitted that sales had fallen over the past two months.

Ms Bravo. who was paid $1.5 million (£912,000) last year, stood to earn a bonus of between $750,000 and $1.5 million if she met certain performance targets. Yesterday, however, the company announced: “She will not receive her full bonus allocation.”

Shares in the luxury goods group, famous for its mustard-yellow check, fell nearly 6 per cent as it gave warning that war in Iraq and the Sars virus had hit sales, particularly in London and the Far East.

Mike Metcalf, the chief financial officer, said: “The last couple of months have been tough times but we think they were exceptionally tough and that the edge will come off that in the autumn.”

Burberry floated last July, spinning off 25 per cent of its shares from parent company Great Universal Stores.

Reporting maiden annual figures yesterday, the company said profits for the year to March 31 had risen by £300,000 to £85.1 million after £24.3 million of exceptional costs relating to staff share issues during the flotation.

Sales rose 19 per cent to £593.6 million, or 12 per cent on an underlying basis. The total dividend is 3p.

Last summer it was revealed that Ms Bravo was to be awarded a package potentially worth more than £15 million. On top of her salary and bonus, she was given a 0.5 per cent stake in Burberry immediately after the flotation, and the promise of a further 0.5 per cent in 2005. She also receives benefits worth several hundred thousand pounds a year.

Burberry met internal and external targets last year. Earnings before interest, tax, exceptional items and goodwill amortisation rose 29 per cent to £116.7 million, against analysts’ expectations of £115 million.

However, the company’s remuneration committee has decided not to pay Ms Bravo her full bonus.

A spokesman for the company said: “This indicates the exceptionally tough targets that she has been set.”

Mr Metcalf said that Burberry had performed well in a difficult period for the luxury goods market, The company added: “We expect to meet market consensus for profit growth in times that are much tougher than we envisaged. We are still confident and strong.”

Performance was boosted after the company broadened its range of accessories to include scarves and watches. The group also opened new stores and acquired a franchise operation in Korea.

Ms Bravo said that the company had improved sales this spring by introducing a wide range of swimwear and light clothing such as cargo trousers, helping it to move away from a reliance on heavy winter clothing. Burberry plans to open 40,000 sq ft of new selling space this year, including four new stores in the US, one in Milan and three in Asia, including one in Hong Kong.