It was one in the bag for Burberry this week, as the luxury retailer revealed a 25 per cent surge in profits for the year to the end of March. The figures confirm that, despite the credit crunch, nothing comes between a woman and a handbag.

Non-apparel sales during the year were the fastest growing category for the iconic UK retailer, most famous for its outerwear and Burberry check,

Shoes and handbag sales increased 39 per cent in the year, accounting for 32 per cent of retail sales, up from 28 per cent the year before. Shoes walked all over the competition, with sales more than doubling during the period. Burberry will test luggage for autumn, after the successful launch of jewellery this spring.

The results echo anecdotal evidence from other luxury retailers, such as Selfridges, whose Wonder Room of luxury gifts is understood to be performing ahead of expectations.

Jeweller-to-the-stars Theo Fennell is also close to announcing what are expected to be robust full-year results, after it revealed record sales earlier this year. Irish department store Brown Thomas is gearing up to launch its luxury accessories floor, while its Knightsbridge counterpart Harrods has unveiled its Objet Room of top-end gifts.

Even the aspirational end of the sector is looking to cash in on surging demand for accessories, with the likes of House of Fraser and Debenhams betting on bags.
The smart money appears to be on accessories.

However, it was not all shiny shoes and It bags at Burberry. Chief financial officer Stacey Cartwright said the retailer had seen more volatility this year with unexpected swings in sales at some stores. Most other luxury players can expect more of that to come – especially as the crucial summer tourist season approaches.

It could be the luxury sector’s toughest test since the beginning of the downturn, from which it has appeared largely immune. Tourists are unlikely to descend on the UK with their vital money in such droves as previous years this summer.

Meanwhile this week, Baugur did what Moss Bros founding family members wanted and Baugur-ed off, paving the way for a new chapter in the menswear retailer’s history. But, as speculation mounts about who will head the retailer following the Icelandic raider’s decision to walk away, there is little hope of stability in the immediate term.

Baugur’s exasperation at having to abandon its 42p-a-share offer for the business was tangible in the announcement released this week, which blamed changes in Moss Bros’ share register. The wording is a thinly veiled reference to the puzzling stake-building by Laura Ashley above the offer price to command a near 10 per cent holding.

Laura Ashley’s intentions remain unclear to shareholders and observers alike. However, Laura Ashley may be wiser to concentrate on getting its own house in order, after the fashion-to-furnishings retailer announced a like-for-like slump of 7.6 per cent in the first 17 weeks of its financial year yesterday. Laura Ashley should be looking closer to home before knocking on its neighbours’ doors.

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