'Chav' link has affected demand, says Burberry

Burberry admitted it was failing to shake off its "chav" association as it confessed retail sales in the UK were "subdued". But the luxury goods brand said a surge in revenues from its licensing arm on the back of strong sales of its latest fragrance had compensated.

Burberry admitted it was failing to shake off its "chav" association as it confessed retail sales in the UK were "subdued". But the luxury goods brand said a surge in revenues from its licensing arm on the back of strong sales of its latest fragrance had compensated.

Total retail sales across the group's company-owned stores rose 4 per cent in the six months to the end of September, buoyed only by opening three new stores in the US.

Stacey Cartwright, the new finance director, said: "We're missing the UK domestic consumer ... the UK market has been sluggish, particularly in central London." She admitted that the adverse publicity over the popularity of the group's trademark check with "chavs" - an emerging class of twentysomething urbanites who favour designer labels but lack the social status of traditional luxury goods customers - was probably behind the fall in demand. "It won't have helped, I'm sure", Ms Cartwright added.

Burberry is attempting to reposition the brand away from its trademark check after the beige-and-black motif was hijacked by the likes of football hooligans. But it has denied reports that it is ditching the check, which will feature in a bluebell shade on handbags next year. Its Prorsum label, under the aegis of Christopher Bailey, received hit reviews for its spring/summer ranges in Milan earlier this month.

Burberry reported a 28 per cent rise in reported licensing revenues, which was way above analysts' expectations. Half of the gain came from the Japanese market, with the successful launch of its Burberry Brit fragrance for men also bolstering revenues. A new agreement with its French perfume partner will see it expand fragrances into other personal care lines such as body lotion.

Rose Marie Bravo, the chief executive, said: "We're delighted with our new fragrance licence which will deliver ongoing financial and marketing benefits." Its French partner, Inter Parfums, will pay a higher royalty rate and "significantly" increase the amount it spends advertising Burberry fragrances.

Total underlying revenues rose 14 per cent, but the weakness of the US dollar meant reported revenues increased by only 8 per cent. Reported wholesale revenues rose by 8 per cent, or 13 per cent excluding the negative currency effect.

The group said it expected its wholesale revenues to grow by mid-to-high single digits for the spring/summer season.