Burberry lifted by shoppers' taste for bit of luxury

The company, which is famous for its red, black and camel tartan design, reported continued strength in the UK and rising demand from Chinese consumers as retail sales for the quarter to December 31 jumped 36 per cent.

Buoyed by the strength of trading in its third quarter, Burberry said it now expected profits for the current financial year to be at the top end of market forecasts.

It is the latest upgrade from the retail and wholesale chain, which makes its iconic trench coats in Castleford and has another factory in Keighley.

Numis Securities increased its pre-tax profits forecast from 271m to 287m.

Analysts at Numis said that Burberry's high quality growth story more than supported its positive rating.

Burberry said same-store retail sales grew by 14 per cent, with operations in the Americas, Asia Pacific and Europe all delivering double-digit growth.

Burberry said outerwear and large leather goods accounted for about half of the retail division's growth, helped by a further increase in the average price per item.

During the quarter, Burberry opened seven stores, including in Sao Paolo, Brazil and Puebla, Mexico, as well as a flagship store in Beijing.

Across the second half of the year, average selling space is expected to increase by about 25 per cent, with about 15 per cent in China after Burberry bolstered its operations there by buying out its franchise partner for 70m.

With revenues from wholesale operations up 15 per cent, Burberry said its total revenues rose by 27 per cent in the three months to December 31.

Analysts at Charles Stanley said: "Luxury goods is a structural growth global industry, driven by rising disposable incomes in emerging markets, a growing number of high net worth individuals, the increasing spending power of working women and a growing propensity to travel.

"Burberry is particularly well placed to exploit this trend, given its iconic brand, action being taken to leverage the franchise and excellent marketing programmes," they added.