China laps up Burberry's brand of luxury fashion

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The Independent Online

Revenues at Burberry continued to power ahead in its first quarter, as global demand for luxury products shows no sign of abating.

The British fashion brand was particularly boosted by its operation on mainland China, but it also named Taiwan, the US, France, Germany and the Middle East among its "best-performing markets". In fact, Burberry delivered double-digit growth across all regions, retail, wholesale and product categories over the three months.

Stacey Cartwright, the finance director of Burberry, said that it was "the established markets as well as the emerging ones", although she noted that the company's performance in Spain and Italy was "softer".

For the three months to 30 June, the 155-year-old company fashioned a 34 per cent leap in total revenues to £367m. Burberry shares, which topped the FTSE 100 with a 7 per cent climb to 1,531p yesterday, have risen nearly 10-fold since the end of 2008 as the luxury sector has returned to form. The group grew profits by 39 per cent to £298m for the year to the end of March 2011.

Burberry acquired 50 franchise stores in China last September and the country contributed 20 per cent to the 49 per cent leap in its retail sales to £245m in the first quarter. While Burberry's Asia-Pacific unit registered the biggest increase, with revenues up 67 per cent, it grew by 21 per cent in Europe, 26 per cent in the Americas and 27 per cent in the rest of the world.

At a product level, Burberry cited strong performance from menswear, kidswear and accessories, including bags for men to carry laptops and iPods.

But Burberry's operating margins are set to fall in the first half, as it invests up to £200m this financial year in its stores, including refurbishing its Knightsbridge shop and a big new outlet on London's Regent Street by next spring. Ms Cartwright said: "In advance of the [2012] Olympics, we want to make sure the brand reality lives up to the fantastic perception that is out there and that is why we are making a big investment in two big flagships in Knightsbridge and on Regent Street."