Emerging markets boost Burberry

LUXURY fashion chain Burberry boosted profit hopes yesterday after a 21 per cent increase in first-half revenues, generated by strong sales of coats and leather goods.
By The Newsroom
Published 14th Oct 2010, 13:59 BST
Updated 14th Oct 2010, 13:59 BST

The 154-year-old maker of raincoats and handbags said its expansion in stronger-growing, emerging markets, coupled with a surge in tourism from countries such as China, will help it to cope with austerity measures.

The company, which took centre stage at the recent London Fashion Week, said it continues to build momentum with strong performances in markets such as Hong Kong, the UK, Italy and France.

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It is also targeting more of the Chinese market after recently agreeing a 70m deal to buy out its franchise partner in the country.

The company's retail division posted sales growth of 22 per cent in the second quarter, up from 16 per cent in the first quarter.

Like-for-like sales rose eight per cent, down from 10 per cent growth in the previous three months, with outerwear and large leather goods accounting for half the growth.

Shoes, childrenswear and the Prorsum collection also did well.

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Burberry chief executive Angela Ahrendts said the company expects annual profits to be in the top half of market expectations.

She added that new products, online, and customer service initiatives and the Chinese expansion, are helping to underpin confidence.

Burberry, best known for its camel, red and black check pattern, said revenues rose 12 per cent at constant exchange rates to 359m in the three months to September 30.

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

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Burberry weathered the economic downturn better than many rivals, thanks to a quick response which saw it slash costs, jobs, stocks and ranges.

It made 170 staff redundant last year when it closed a sewing facility in Rotherham, in order to consolidate its operations in Castleford, where the iconic trench coats are made. It also has a factory in Keighley.

The company has since stepped up investment, focusing on emerging markets, e-commerce and menswear.

Related topics:BurberryCastlefordChinaHong KongFranceItaly