Check out Burberry's sales on the high street

Published on Tuesday 15 July 2008 21:22

TWO of the best-known names in the world of high street fashion have topped market forecasts with their latest figures, but the underlying picture at both Burberry and H&M mirrors a tougher retail environment.

Luxury goods group Burberry, famous for its camel, red and black check design, said revenues leapt 26 per cent to 211 million in the three months to the end of June.

The UK firm benefited from its "geographic diversity", enjoying sales growth of 27 per cent in the Americas and 19 per cent in Asia Pacific.

In Burberry's home market – which accounts for just 7 per cent of group turnover – sales were described as "nicely positive".

Meanwhile, Swedish fashion giant H&M yesterday reported June sales growth ahead of market expectations.

The world's third-biggest clothing retailer by sales, with more than 1,500 stores in 29 countries, including about 140 outlets in the UK, said sales were up 8 per cent against market forecasts of a 5.2 per cent gain.

On the face of it, both retailers appear to be bucking the general economic downturn. Yesterday, figures from the British Retail Consortium showed that high street sales had fallen last month as households reined in spending.

However, Burberry warned that sales patterns remained "volatile on a weekly basis".

Much of the group's first-quarter growth was driven by early shipments of autumn and winter ranges in its wholesale supply business, which Burberry said would even out in the months ahead.

The British fashion house, which made its name equipping polar explorers, noted that sales at shops open at least a year were 4.5 per cent higher in the three months to 30 June.

That was down from 6 per cent in the fourth quarter, but chief financial officer Stacey Cartwright said that, excluding another weak performance from its Spanish business, first-quarter growth held at around the same level.

Burberry, which also operates a string of concessions and franchised stores, pointed to strong demand for lighter-weight versions of its classic trench coat and "funky" shoe styles.

The label has largely shaken off its association with the "chavs", "neds" and football hooligans that blighted the brand during the 1990s.

Analysts at JP Morgan said they would maintain their full-year forecasts for Burberry, whose shares have lost about a fifth of their value over the past month on fears a slowdown in consumer spending will hit sales.

"Still, no change is better than what most could fear," the investment bank said in a research note yesterday. Luxury goods businesses believe their well-heeled customers may be more immune to a downturn than others.

Over at H&M, which has been growing rapidly in the UK where it competes with middle-market retailers such as Gap, Topshop and New Look, turnover in stores open a year or more was down 2 per cent year-on-year.

The market had been braced for poor figures, with a fall of as much as 5.6 per cent pencilled in.

But analysts remained upbeat about H&M's prospects as key markets in western Europe turn cool.

Lars Poulsen, an analyst at Jyske Bank, said: "We are quite positive. H&M is fairly low priced ... its more appealing than the high end."