Flagship stores help Burberry shrug off Sars

Burberry, the luxury fashion label, yesterday posted strong second-half sales, despite uncertainty over the market for consumer goods, but said the deadly Sars virus in Asia had damaged revenues in Hong Kong.

The company, whose signature beige raincoat with checked lining is worn by celebrities such as Kate Moss and royalty, reported revenue growth of 22 per cent from licensing, retail and wholesale sales for the six months at the end of March. Sales in the UK and in Hong Kong, however, throughout March were down on the same time last year.

Mike Metcalf, finance director, said: "In the UK, we are really only a London and airport retailer and from the end of February a number of factors, such as the congestion charge and the problems on the Central Line, have impacted sales. The Iraqi conflict has also dented confidence and has meant fewer people are travelling.

"The Sars virus has clearly had an impact on Asia, with many airlines cutting their capacity and the Hong Kong consumer has been choosing to stay rather more at home and not get out there and shop as usual."

Several new flagship store openings, in New York and in Knightsbridge, London, have helped boost sales, particularly of the company's accessories range and womenswear. Further store and concession openings this year are expected to increase Burberry's selling space by 10 per cent. Underlying retail sales, which exclude currency movements and stores it bought in Asia, rose 30 per cent. The company floated in July 2002 and its second half sales volumes came in ahead of analyst forecasts.

Antoine Colonna at Merrill Lynch said: "Some concerns have emerged related to the Sars virus threat. In practice, this may not be having a significant impact on profits. Neither Hong Kong nor Singapore are key markets."

Underlying sales in its wholesale business, which supplies Burberry goods to department stores such as Selfridges and Harvey Nichols, grew by 6 per cent during the second half of the year. Mr Metcalf said orders for Burberry's spring collection had been high and the company is expecting high single-digit growth for the full spring and summer 2003 season. Licensing revenues in Japan grew 9 per cent.

"This was a pretty robust performance given that the market for luxury goods has been suffering from a lot of negatives and not many positives," Mr Metcalf said. "Things have been pretty tough. But we have been very successful in improving the status of the brand. We have very attractive products that have a strong, classic element, which people want to keep buying season after season."