Bags boom drives Burberry profits

Fashion house Burberry finished a stellar year in style today as bumper sales of leather bags and accessories drove a surge in annual profits.

The 155-year-old maker of raincoats and handbags said sales of non-apparel goods, such as handbags, jewellery and shoes, grew 35% in the year to March 31.

The luxury clothing firm, famous for its red, black and camel check, said its focus on non-apparel paid off as the sector accounted for nearly half the group's sales growth.

Burberry reported a 39% increase in underlying pre-tax profits of £298 million, after a 27% increase in revenues to £1.5 billion.

Burberry and the luxury sector have experienced a more rapid recovery than the rest of the retail sector, driven by demand from Chinese shoppers and tourists.

The company's underlying retail sales increased by 32% in the year, of which 12% was driven by China, where the group has 57 stores.

New store openings were focused on emerging markets, which make up 16% of retail and wholesale revenues, including India, Brazil and Mexico.

The group has accelerated its store growth in the last year - mainly in China and emerging markets - and has 174 mainline stores, 199 concessions in department stores and 44 outlets.

Looking ahead, chief executive Angela Ahrendts pledged to keep up the group's expansion.

She said: "While mindful of global macro challenges in the current year, we will continue to invest to drive growth across our portfolio by channel, region and product."

Kate Calvert, retail analyst at Seymour Pierce, said Burberry operated in a market place with strong long-term growth opportunities.

She added: "We expect it to deliver continued outperformance relative to its peers."