Luxury fashion group Burberry expects full-year profits to come in “at record levels” after a stronger than anticipated end to the year.
Total sales rose 7% to £707m in the six months to March 31, when outerwear, footwear and accessories delivered the strongest growth. Total retail sales rose 14% to £437m and like-for-likes advanced 10%.
The upscale retailer said it now anticipates that pre-tax profit for the year will be slightly above current consensus, which stood at £196m before the update.
Burberry said the UK was among its best-performing markets, supported by tourism. European sales, excluding poorly performing Spain, climbed 5% to £213m.
Chief financial officer Stacey Cartwright said: “We expect profit to be up to record levels despite the challenging economic conditions.”
Retail sales growth was driven by new stores and by strong full-price sales rather than outlet stores.
Sales at its wholesale arm fell 7% to £217m, a decline that Burberry attributed to the closure of some speciality stores in Europe and the continued underperformance of Spain. Burberry said that excluding those factors, wholesale was up by a “mid-single-digit” percentage.
The decline in wholesale was better than the 10% to 12% drop the retailer had forecast. Burberry said the comparative recovery was powered by an increase in in-season ordering as consumer demand grew, coupled with a drop in cancellations due to earlier deliveries.
Investec, however, switched its recommendation from buy to hold. Although Burberry’s business model puts it in a good long- term position, Investec argued “the shares are trading at a premium to their luxury peer group, which has proved difficult to sustain in the past.”