Burberry, which recently hired actress Emma Watson to front it campaigns, has regained its upmarket reputation
Burberry said pre-tax profits were £78.4million in the six months to September 30, down from £97million last year as the effects of discounting hit margins and wholesale orders were reduced.
The firm - praised by commentators after the fashion house returned to the catwalk at London Fashion Week this autumn - said it had seen 'exceptional growth' in London stores after the weak pound attracted foreign shoppers.
Burberry said it now planned to split its clothing brands into three distinct categories - casualwear will come under the label Burberry Brit, workwear and tailoring will be known as Burberry London and its catwalk collection will continue as Prorsum.
After shrugging off its links with 'chav' culture in the UK in recent years, the brand has regained its upmarket reputation.
The firm, which was founded in 1856, opened a children's store in Notting Hill during the period.
It said its policy of focusing on its retail stores had started to pay off, with this now accounting for 54 per cent of all sales.
The retailer said its non-clothing ranges represented its biggest growth area in the first half, contributing 34 per cent of revenue.
The firm said larger handbags, 'sling' shoulder bags and accessories like snoods and scarves had all proved increasingly popular as it looks to diversify its offering.
Shoes and childrenswear were also identified as key growth areas, anticipated to grow to make up 10 per cent each of revenues in the medium term.
Like-for-like sales across the business were up 2 per cent over the half year, improving to 5 per cent in the second quarter.
Chief executive Angela Ahrendts said: 'Burberry delivered a solid first half performance, reflecting the strength of the brand, business and team.
'We enter the second half confident in our core strategies, capitalising on product, region, channel and operational opportunities.'
Cost cutting measures helped limit the fall in underlying profits to £82.6million, from £95.3million a year earlier.
The firm has cut 1,000 roles as part of moves to save £50million a year, which also involved improving its infrastructure.
The retailer now expects to grow its selling space between 8 per cent and 10 per cent for the full year, with plans to open a further 15 stores in the period mainly in Asia and the Americas.
Meanwhile, the firm expects wholesale revenues to fall around 15 per cent at constant currency in the second half, with about half due to Burberry's own actions, while stockists also move to cut their inventories.