Burberry reports strong sales despite lacklustre US market

Posted on 18 Jan 2012 by Tim Brown

Despite a sharp slowdown in US sales growth, British luxury brand Burberry Group has reported strong sales growth through Christmas, driven by the brand’s continued popularity in Asia.

The 156-year old company said that increased sales of leather goods and outerwear, including its famous trenchcoats, boosted total sales by 21% to £574m in the three months to December 31.

Sales for Burberry across the Asia Pacific region were up by 36% to £210m, while sales in Europe grew by 20% to £160m. However, sales in the Americas were the laggard, rising just 4 per cent to £148m in the period. However, the company sought to reassure investors by highlighting that comparable store sales in China grew by 30 per cent in the quarter.

The Burberry Group met forecasts with a 22 per cent rise in third-quarter revenue but the US results proved of some concern to analysts. “Nothing wrong with the overall numbers. However the poor performance in the US and the weak 4Q guidance may worry the market,” Liberum analysts said.

The brand’s flagship stores in London, Paris, Hong Kong and Las Vegas driving like-for-like store sales up by 13 per cent in the period.

Stacey Cartwright, Burberry’s chief financial officer, described the sales performance as “consistent,” but said the company had contingency plans in place in the event that a crisis in the eurozone triggers a slowdown in the luxury goods market.

“The team are on alert and studying [sales levels] vigorously as we go into our new financial year this March,” she said. “We remain responsive and dynamic at the same time, and sensible revenue projections are being matched with sensible investment spend.”

Shares in luxury goods companies have faltered  in recent months amid signs of a slowdown in economic growth in China, the source of recent strong demand for high-end goods, and fears surrounding the sovereign debt crisis in the euro zone .

Jeweller Tiffany and watchmaker Swatch last week warned of slower growth.