Coats and leather goods lift Burberry's expectations

The 154-year-old maker of raincoats and handbags said on Wednesday revenues rose 12 per cent at constant exchange rates to 359m in the three months to September 30, excluding its restructuring Spanish business and led by strong demand in Hong Kong, Britain, Italy and France. That was up from 282m in the first quarter.

"While mindful of our strong second half last year we currently expect adjusted profit before tax for the full year to be in the top half of market expectations," chief executive Angela Ahrendts said, highlighting a "material improvement" in first-half profit margins.

Luxury goods firms have mostly enjoyed a strong 2010 so far as the world economy moved out of recession. But moves in many countries to rein in government borrowing, like higher taxes and spending cuts, have raised fears demand will slow again.

LVMH, the world's number one luxury group, reports third-quarter sales figures on Thursday.

Best known for its camel, red and black check pattern, Burberry weathered the recent economic downturn better than many rivals thanks to a quick response which saw it slash costs, jobs, stocks and ranges.

It has since stepped up investment, focussing on emerging markets, e-commerce and menswear, and is reaping the benefits.

Burberry's shares, which have periodically benefited from takeover speculation, have risen around 75 per cent this year, outperforming the STOXX 600 European household and personal goods sector .SXQP by about 45 percent.

Burberry said comparable store sales rose 8 per cent in the second quarter, down from 10 percent in the first, and that it expected a 25 per cent increase in selling space in the second half, with the bulk coming from stores it bought from its Chinese franchise partner.

Wholesale revenues rose 21 per cent at constant currencies and excluding China in the first half, slightly ahead of company guidance. It forecast 10 percent growth in the second half.

Licensing revenues fell 3 per cent at constant currencies in the first half, and the group expects a full-year decline in a mid-single digit percentage range, slightly better than its previous guidance for a fall of 5-10 per cent.