Asos, Burberry and Primark clothe recession blues with profits rises

POSITIVE news emerged from opposite ends of the fashion spectrum yesterday as discount chain Primark booked a double-digit rise in profits while luxury label Burberry forecast higher earnings of its own.

The pair were joined by Asos, the online fashion retailer whose youthful collections are styled on those worn by celebrities, as it flagged "another year of strong growth" following a 56 per cent surge in sales.

Primark – something of a jewel in the crown for owner Associated British Foods – said half-year profits were up 18 per cent to 144 million after new stores and an 8 per cent rise in like-for-like sales lifted its revenues by almost a fifth to 1.26 billion. Its progress came despite the impact of the weak pound on the cost of imports, particularly those goods sourced in US dollars.

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The chain has ridden out the recession, with its cheap chic clothes proving a hit with cash-strapped shoppers. It has also benefited from rapid expansion in the UK and Spain.

Luxury goods firms, on the other hand, have been hit hard by the global downturn, although evidence is growing that discretionary spending is back.

Last week LVMH, the world's biggest luxury goods group and maker of Louis Vuitton handbags, beat forecasts for first-quarter sales, helped by a strong rebound in the US and Europe.

British fashion icon Burberry yesterday forecast 2009-10 profit "slightly" above market expectations with further progress expected in 2010-11.

Unveiling a 6 per cent rise in underlying revenue in the six months to 31 March, chief executive Angela Ahrendts said: "While the pace and level of the global economic recovery remain unclear, we remain confident that our strategies will continue to build momentum in the business."

She said the 154-year-old maker of upmarket raincoats and handbags plans to drive growth by investing in new regions, such as Brazil and India, as well as new initiatives and e-commerce.

Prior to the update, analysts were forecasting full-year pre-tax profits of about 200m, compared with 175m the year before. Shares in Burberry have more than doubled over the last year, valuing the business at some 3 billion.

Dennis Weber, an analyst at Evolution Securities said: "We remain of the view that upgrades are needed to justify a continuation of the positive momentum and the extent of these will be key."

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In its update, Asos – which stands for As Seen On Screen – said demand for floor-length maxi dresses had helped drive up UK sales by 25 per cent in recent weeks.

The dresses in pastel and flesh-coloured shades were among the items proving most popular with its 3.6 million registered users, the firm said yesterday.

Overall sales in April to date were 56 per cent ahead of a year earlier, Asos added.

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