Burberry terminates fragrance agreement

Luxury brand Burberry has terminated an agreement with its French perfume licensee as it keeps its options open on how to manage the business in future.

Burberry will pay Paris-based InterParfums around €181 million (£141.55 million) to terminate the deal with effect from December.

But it is continuing discussions with the French company about how to structure a new deal. It said the outcome of discussions is “uncertain”.

Termination of the agreement — set up more than 15 years ago — leaves Burberry open to pursue other options if a deal cannot be struck with InterParfums.

Burberry said it had taken the decision to end the contract “to maintain flexibility in pursuing its objective to develop fully this business in the future”.

The British brand has been renegotiating a number of contracts and licensees in a wholesale shake-up of its global business to give it more control of how its products are sold to customers.

Talks to renegotiate a deal with InterParfums began last December. Losing the agreement would be a huge blow to the worldwide licensee. Perfume is a lucrative business. Its most recent line — Burberry Body — has been the most successful launch ever.

Burberry is the most profitable for InterParfums, which also sells brands including Jimmy Choo, Anna Sui and Lanvin.

Burberry fragrance sales were up 96% in the final quarter of 2011.