Overseas visitors help to push Burberry sales up 5%

Published on Wednesday 14 October 2009 21:18

LUXURY goods firm Burberry has followed up its successful return to London Fashion Week by posting sales figures at the top end of expectations.

Its shares closed up more than 5 per cent after it reported a positive response from shoppers to its autumn and winter collection, with handbags and casual outerwear particularly popular.

Like-for-like sales in its stores rose by 5 per cent in the quarter to 30 September, compared with the flat performance seen in the first quarter.

Demand for leather goods, handbags and "snoods" – scarf-like wrap-around head-dresses – helped to swell sales.

The UK was again one of the company's best performing markets, as foreign visitors to London took advantage of the weak pound.

Burberry, which was founded in 1856, received praise from critics last month after it returned to the catwalk at London Fashion Week. The company has also unveiled a stable of celebrity models, including Harry Potter actress Emma Watson.

After shrugging off its links with "ned" or "chav" culture in recent years, the brand has regained its upmarket status.

Evolution Securities analyst Dennis Weber said: "Today's statement confirms our view that the Burberry brand is likely to continue to outperform the rest of the luxury sector in the current difficult environment."

Burberry's underlying store sales rose 14 per cent in the half-year period, with a 12 per cent net increase in average selling space accounting for 8 per cent of the growth.

The division, which generated more than half of the company's revenues in the first half, operated from 122 retail stores, 255 concessions, 47 outlet sites and 90 franchise stores at the end of September. Recent openings include Burberry's first flagship site in a Singapore. However, the wholesale business saw sales drop 23 per cent, as customers faced up to the recession by slashing the amount of stock held, while Burberry has also restructured the division and closed some operations.

For the second half, Burberry expects wholesale revenues to be down by about 15 per cent in constant currency terms. Shares in Burberry closed up 28.5p at 565.5p last night.