Burberry enjoys sales rise but its shares feel the pressure from tougher outlook

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Luxury goods group Burberry posted a 6 per cent hike in underlying sales thanks to higher prices and strong demand for its men’s clothing ranges.

But shares came under pressure as the like-for-like figure missed City expectations and as it noted “more challenging” trading conditions in its first quarter.

Burberry’s total revenues were 11 per cent higher at £408m in the three months to June 30, while store sales were up 14 per cent to £280m.

It said men’s tailoring continued to perform strongly after a 26 per cent leap in menswear sales during its last financial year, while the group added there was a “further increase in average selling prices, driven by product innovation”.

Despite recent fears of a slowdown in Asia, Burberry confirmed ‘double-digit’ comparable sales growth in China.

However, shares fell as its first quarter figures marginally missed forecasts. Analysts had expected like-for-like sales growth of 7 per cent to 8 per cent. Burberry opened six new stores in the quarter and closed two as part of plans to add another 12 per cent to 14 per cent of selling space in this financial year.

It is focusing on larger format stores, such as its relocated site in London’s Regent Street.

Angela Ahrendts, chief executive of Burberry, said the group had delivered a “robust” first quarter, “against a more challenging external environment”.

Its sales growth compares well against many of its high street counterparts, with Marks & Spencer on Tuesday reporting a 6.8 per cent drop in non-food comparable sales – its worst performance for more than three years.

However, there are concerns that Burberry’s performance will slip as the global economic woes take their toll on some of its markets.

Burberry’s US arm delivered the weakest sales growth in the first quarter, at 2 per cent, as it continues to be hit by the planned rationalisation of wholesale distribution.