Thanks to performance in the U.S. and emerging markets, the luxury fashion group delivered surprising sales and profit increases
The US and emerging markets helped the luxury fashion group Burberry deliver a credit crunch-defying set of profits and sales for the year to 31 March.
Burberry's finance director, Stacey Cartwright, said: "Where we have got the biggest growth is in the US and the emerging markets, such as Russia, the Middle East and China."
The luxury group posted a 25 per cent uplift in pre-tax profits to £195.7m and underlying sales up by 18 per cent to £995.4m for the full-year.
Ms Cartwright said: "It demonstrates the strength and the breadth of the Burberry brand and unlike some of our peers we play strongly across menswear, womenswear and non-apparel." It grew total revenues by 26 per cent in the Americas, where it posted retail sales growth of more than 20 per cent and "exceptional" growth in wholesale for the year. Ms Cartwright dismissed the "gloom" over the US economy.
Burberry is bullish about its prospects in the US and forecast it will continue to grow wholesale revenues by more than 20 per cent for the half year to 13 September. She said Burberry is "under-penetrated" in terms of the US wholesale market. It plans to add up to 10 mainline retail stores this financial year.
Non-apparel was the fastest growing of Burberry's main product areas.
Thomas Chauvet, a Citi analyst, said: "Burberry's sales momentum should continue and outperform the broader luxury industry in 2008." Citi forecasts 11 per cent underlying sales growth in the year to March 2009 and earnings per share growth of about 20 per cent.
Luxury retailers have proved more resilient to the bite of the credit crunch. Last week, the Swiss luxury group Richemont posted a 18 per cent uplift in full-year profits, although weaker-than-expected sales from Gucci last month prompted some analysts to forecast a potential shake-out of the luxury goods market.
In Europe, Burberry grew revenues by 26 per cent. Ms Cartwright singled out Italy and Germany as being strong performers. However, its Spanish operation grew sales by just 1 per cent, which the group attributed to "sharp" slowdown in sales in the second half of the year and the weak economy in Spain.
Ms Cartwright said the UK — which generates about 7 per cent of Burberry's total sales — posted a "modest growth" but she declined to provide numbers.