British luxury brand Burberry allayed fears of a sales slowdown in China after announcing forecast-beating results today.
The fashion group revealed a 9% jump in sales to £1.116 billion in the six months to April, well ahead of analysts’ estimates.
It said demand from Chinese shoppers for its high-end products such as leather bags and coats helped it report a “strong finish to the year”.
Retail sales, a growing part of its business and now 75% of the entire group, was up 7% on a comparable basis to £840 million.
Its shares gained 58p to 1324p on news of the healthier results.
Angela Ahrendts, chief executive, said the brand had a particularly strong “Christmas and Chinese New Year” but she expects “the external global environment to remain challenging”.
Finance boss Stacey Cartwright, who will leave the leave in July to be succeeded by Carol Fairweather, said Burberry now has “strong brand momentum” and said a sales surge of expensive leather handbags such as its Blaze and Orchard handbags confirmed this.
The sales results will be a relief to those concerned about growth potential for the global luxury sector. Concerns were raised on Monday when luxury goods giant LVMH revealed its weakest quarterly growth rate since 2009.
Burberry’s move to retail and its reduction of wholesale, particularly in Europe, generated a 3% dip in sales for the period to £220 million.
Cartwright said: “Wholesale has been affected by rationalisation of our accounts in Europe due to credit issues or the positioning of the account not being right.”
Footfall across stores in all regions has been weaker as “aspirational consumer reigned in spending”, Cartwright said.
But the brand will continue to open stores and has three planned in Shanghai. Burberry said it is “thrilled with the success” of its Regent Street store that opened last year.
Cartwright added: “We have Kaiser Chiefs playing there next week. It is about bringing the Burberry brand to London.”
Burberry is focused on growing its beauty arm after it took the licence to its perfume business in house.
The group will reveal its preliminary results in May.
