Burberry bags itself a hefty rise in profits
The enduring popularity of Burberry handbags and the fashion house's allure for Chinese shoppers spurred a 39% rise in annual earnings.
Classic appeal: Red, white and camel-checked items still lure shoppers
The luxury goods giant posted an underlying pre-tax profit of £298m for the year to March 31. Revenue increased 27% to £1.5bn, and the full-year dividend was hiked 43% to 20p.
The 155-year-old maker of raincoats revealed sales of its non-apparel goods, such as handbags, jewellery and shoes, grew 35% in the year.
The firm said its focus on non-apparel had paid off as the sector accounted for nearly half the group's sales growth.
Burberry and the luxury sector have experienced a more rapid recovery than the rest of the retail industry, as sales are driven up by demand from Chinese shoppers and tourists.
The company's underlying retail sales increased by 32% in the year, of which 12% was driven by China, where the group has 57 stores.
Chief executive Angela Ahrendts hailed the strong operational and financial progress achieved during the year.
'While mindful of global macro challenges in the current year, we will continue to invest to drive growth across our portfolio by channel, region and product,' she said.
New store openings were focused on emerging markets, which make up 16% of retail and wholesale revenues, including India, Brazil and Mexico.
The group has accelerated its store growth in the last year - mainly in China and emerging markets - and it has 174 mainline stores, 199 concessions in department stores and 44 outlets.
Shares in Burberry were down 39p at 1,281p in trading today.
View from the City
Kate Calvert, retail analyst at Seymour Pierce, said Burberry operated in a market place with strong long-term growth opportunities.
She added: 'We expect it to deliver continued outperformance relative to its peers.'
Broker Dolmen Securities noted that growth was quite strong across all of the group's regions, with Asia Pacific particularly strong.
'Those invested in the luxury goods sector should also take comfort this morning from Ms Ahrendt's comments that she sees a modest improvement in the group's full year operating margin, which is in contrast to Ralph Lauren's margin warning yesterday,' it commented.
Analysts at asset manager Investec said the results were slightly better than they forecast given Spanish losses were lower than expected.
'After a strong run the shares may pause for breath, but we remain buyers for the sustainable growth story,' they said.
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