Burberry shares rise after a reassuring trading update

Burberry shares rose more than 10 per cent today after the luxury fashion brand posted a reassuring trading update despite a drop in footfall.

The group, known for its red, camel and black check, said underlying revenues grew by 10 per cent to £577million in the six months to September 30.

However, sales in the UK and China slowed in the second quarter, confirming that the global crisis has affected its key market for luxury goods.

The group, which has 198 retail stores, 215 concessions, 49 outlet shops and 62 franchise stores worldwide, issued a profit warning last month, triggering a 20 per cent drop in share price.

Burberry said higher quality sales, such as its Prorsum range, offset a drop in customer numbers, with Hong Kong, France and Germany showing a robust performance.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: ‘The underlying strengths of the company, which for the moment seem to have been dismissed by investors, remain intact and today’s statement shows some strong underlying growth.’

Meanwhile, Burberry said it had taken back the operation of its fragrance and beauty categories from Interparfums, following the end of its existing licence.

The group reported a 3 per cent rise in same-store sales, but the quarterly breakdown showed the like-for-like performance slowing from 6 per cent in the first quarter to 1 per cent in the second.

Chief executive Angela Ahrendts said: ‘In a more challenging external environment, footfall declined but brand momentum remained strong, particularly with our higher spending luxury consumer.’

During the first half, Burberry opened 13 mainline stores and closed seven, focusing mainly on flagship markets, including London’s Regent Street, Hong Kong, Milan and Rome.

Burberry previously announced plans to add a further 12 per cent to 14 per cent of selling space in this financial year and the company is in line to meet that target.

Looking ahead, average retail selling space is on track to increase by about 14 per cent with openings planned for Chicago, Shanghai and a standalone menswear store in Knightsbridge, London, as well as further stores in Brazil, Mexico and the Middle East.

Burberry reported a 24 per cent surge in annual profits to £366million in its last financial year, while total revenues were also up 24 per cent to £1.9billion as key Asian markets showed more strong growth.


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