Burberry outstrips market forcasts with 32 per cent increase in profits

Burberry, the luxury goods group that listed on the London Stock Exchange earlier this year, yesterday brushed aside volatile trading conditions to report a strong rise in underlying profits.

The company, which has received a fresh lease of life under its American chief executive Rose Marie Bravo, exceeded analysts' forecasts to report a 32 per cent rise in core earnings. "This strong financial performance is notable in light of the challenging trading environment," Ms Bravo said.

The increase came from strong sales of its traditional women's fashion lines, which account for a third of the business, and from its move to expand its higher-margin accessories lines to 28 per cent of sales, up from 25 per cent.

Earnings before interest, tax and goodwill amortisation (used to mark the comparison with Burberry's performance last year as part of GUS) rose 32 per cent to £55.1m. Reported pre-tax profits fell to £26.7m from £37.4m, after costs relating to the initial public offering. Of these, the bulk concerned the employee share scheme, which saw Ms Bravo take a 1 per cent stake in the company. That was worth nearly £12m yesterday.

"Consumers are impressed by the change in the company and the work it is doing," Sagra de Maceira, at JP Morgan, said. "I am concerned that the consumer is not very buoyant but there are still companies that do well. Burberry is one of those."

In the past few years the group, best known for its trademark check, has reinvented itself as a cutting-edge fashion house from a dowdy maker of raincoats. Although an iconic label in the UK, Burberry is a relative minnow in other global fashion capitals and is focusing on driving sales in the US and Asia.

Despite a backdrop of intense pressure for luxury goods groups, which are still suffering from the downturn in tourism after 11 September and shaky consumer confidence, Burberry increased its underlying retail sales by 17 per cent, of which about 8.5 per cent was like-for-like growth. Turnover for the six months to end-September rose by 15 per cent to £273.7m, helped by its Asian acquisitions and strong licensing revenues.

Burberry also said its wholesale order book would show "single-digit growth" for spring/summer next year after a flat autumn/winter. Its shares, which debuted at 230p, fell 11p to 236p on profit-taking.