Oct. 14 (Bloomberg) -- Burberry Group Plc, the maker of $2,195 metal-studded Warrior handbags, said second-quarter sales rose 17 percent on demand for coats and accessories from the U.S. to Asia.

Revenue climbed to 328 million pounds ($575 million) in the three months through September from 281 million pounds a year earlier, the London-based company said today in a Regulatory News Service statement. That beat the 314 million-pound median estimate of six analysts surveyed by Bloomberg.

Burberry is capitalizing on its British heritage to draw shoppers even as economies stagnate or shrink in the U.S. and western Europe and financial companies cut jobs. Sales gained 25 percent in European countries other than Spain, where house prices are plunging and independent retailers who placed wholesale orders for Burberry fashions are failing.

``Strong growth out of Europe excluding Spain, the U.S. and Asia is reassuring,'' John Guy, an analyst at MF Global in Londin, said in an e-mailed statement.

First-half operating profit will be in line with analysts' consensus estimates of between 91 million and 98 million pounds, Chief Financial Officer Stacey Cartwright said on a conference call. The clothier forecast ``broadly'' unchanged wholesale revenue in the fiscal second half, when it plans to increase retail space by an average of 12 percent.

Retail Sales

Burberry slipped 3 pence, or 0.9 percent, to 319 pence at 8:36 a.m. in London trading, erasing a gain of as much as 4.3 percent. The stock has lost almost half its value this year as the 13-company Bloomberg European Fashion Index has slid 36 percent on concern about demand for higher-priced goods from clothes to watches.

Second-quarter retail sales rose 23 percent to 130 million pounds, while wholesale revenue gained 15 percent to 174 million pounds. Revenue from licensing its name for use on eyeglasses and other goods fell 3 percent to 24 million pounds, the company said.

Burberry, whose black-leather-and-fur trench coat was worn by Sarah Jessica Parker in the film version of ``Sex and the City,'' is emphasizing handbags and expanding in emerging markets to maintain growth. The company opened an outlet in Budapest during the first half.

``Revenue growth is increasingly dependent on floor additions,'' Yasuhiro Yamaguchi, an analyst at UBS in London with a ``neutral'' rating on the stock, said in an Oct. 8 research report. ``There is a risk that fixed cost inflation will not be fully covered by sales growth, with possible margin squeeze.''

First-half sales rose 20 percent to 539 million pounds from 449 million pounds a year earlier.

Concern about the industry outlook is intensifying as sales show signs of weakening in eastern Europe, where luxury-goods makers opened stores in recent years to capitalize on stronger economic growth. LVMH Moet Hennessy Louis Vuitton SA, the world's largest luxury company, put spending plans under review last week as the credit crunch bites.

Burberry created the trench coat, a fashion staple often associated with detectives in novels and ``film noir'' movies, for officers in the British army.

To contact the reporter on this story: Sara Gay Forden in Milan at sforden@bloomberg.net.

Last Updated: October 14, 2008 03:40 EDT