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Britain's luxury brand Burberry reports 14pc rise in Q3 revenue

The Sydney News.Net Wednesday 15th January, 2014

LONDON - Britain's largest luxury fashion brand Burberry Wednesday reported a strong 14% rise in revenue to 528million pounds ($866million; 635million euros) for the third quarter to 31 December 2013, the company said.


The revenue got a boost due to rise in sales over the Christmas period.

A 12% rise in comparable sales was "in line with our expectations", said chief executive Angela Ahrendts, who is leaving to join Apple this year.

She hailed Burberry's continuing strong brand momentum and the impact of a planned increase in marketing investment.

But she warned that exchange rates would be a "significant headwind in the second half and beyond" while the wider economic climate remained uncertain.

Burberry reported that shoppers were increasingly buying online and making use of its "click-and-collect" service, the company said.

As a result Burberry's digital channel "outperformed".

Burberry's outperformance contrasts with Italian suitmaker Ermenegildo Zegna SpA last week reporting that October and November "were not good months overall."

By region, Asia Pacific delivered double-digit growth, led by Hong Kong, Macau, and Taiwan. Comparable sales growth in mainland China reached double-digits, CFO Carol Fairweather said, in part due to the earlier timing of Chinese New Year.

Speaking on a conference call Wednesday morning, Fairweather said: "We were very pleased with our growth in China. Hong Kong did nicely. Korea and Taiwan - [we had] good growth out of all of those.

"Looking forward, we see further growth opportunities coming in the future from South East Asia. Asia's a very important market to us - both at home and when they travel outside of Asia."

Outerwear - which includes the brand's signature trench coats - together with large leather goods contributed about half of the growth while men's accessories and tailoring also performed strongly.

The company said stores continued to be hit by "weak" footfall reflecting a trend across the sector but digital sales outperformed, after investment in collect-in-store services.

Chief executive Angela Ahrendts - due to leave later this year - said: "In the all-important festive period, we are pleased with our 12% comparable sales growth, which was in line with expectations."

Burberry said its Asia Pacific region saw double-digit percentage comparable sales growth, led by China and continued improvement in Korea.

During the third quarter, Burberry opened five new stores, including two in China and the first Burberry Beauty Box in Covent Garden, London.

Looking forward, the company said its outlook remained unchanged from the interim results in November 2013.

Burberry's shares were up more than 6% in early morning trading as the market reacted positively to the trading statement.

Its shares are up nearly 13% over the past year.

Richard Hunter, head of equities at stockbrokers Hargreaves Lansdown said: "Burberry has trounced expectations and the share price is racing ahead as a result.

"This update could provide something of a springboard for Burberry," he added.

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