Burberry posts strong Christmas sales

British luxury brand Burberry posted a 14 per cent rise in underlying retail revenue in the Christmas quarter, though it cautioned that at current levels, exchange rates will be a significant headwind in the balance of its second half.

The 158-year-old seller of raincoats and leather goods, known for its camel, red and black check pattern, said today it made £528 million of retail revenue in the three months to December 31st.

That compared to analyst’s average forecast of £520 million, £464 million in the same period last year and first half growth of 17 per cent.

Comparable store sales rose 12 per cent, compared to 13 per cent in the first half, reflecting double-digit growth in Asia Pacific; and mid to high single-digit growth in the Americas and EMEIA (Europe, Middle East, India and Africa) divisions.

"This performance reflects continuing strong brand momentum and our team's intense focus on retail execution, supported by a planned increase in investment in marketing, customer service offline and online and our retail portfolio," said chief executive Angela Ahrendts.

Shares in Burberry have fallen 7 per cent since October 15th when it said Ms Ahrendts will step down in mid-2014 to take up a job at Apple and hand over to creative director Christopher Bailey, but are still up 11 per cent over the last year.

They closed at 1,469 pence yesterday, valuing the business at £6.49 billion pounds.

The jury is still out on whether sales growth in the luxury goods industry this year will match, drop or slightly outpace the 10 per cent rise recorded last year at constant currencies.

Analysts at Bank of America Merrill Lynch and HSBC are forecasting a slight slowdown to 9 per cent while others are expecting growth of 11 per cent.

Luxury investors are closely monitoring any signs of recovery in China, the industry’s former principal engine of growth, hampered by an economic slowdown and the government’s crackdown on conspicuous consumption.

While demand in the United States and Japan is seen as remaining strong and tourist spending in Europe should recover after having suffered in 2013, adverse foreign exchange movements are likely to continue impacting European luxury goods makers’ revenues once converted in their home currency.

“The macro environment remains uncertain, but we are confident that our proven strategies will continue to deliver long-term value for shareholders,” said Ms Ahrendts. (Reuters)