Burberry beats luxury sales forecasts

British luxury goods group Burberry smashed third-quarter sales forecasts and predicted annual profit towards the top end of market expectations, adding to evidence the rich are spending again.

The 154-year-old maker of upmarket raincoats and handbags also said on Tuesday it expected profit growth in 2010-11.

"Our philosophy here is whatever's happening in the outside world, whatever's happening with the luxury consumer, our strategy should help us drive outperformance," Chief Financial Officer Stacey Cartwright told reporters.

Luxury goods firms have been hit hard in the recession but Burberry has coped better than most because it reacted quickly by slashing costs and jobs as well as its stocks and ranges.

The group, known for its camel, red and black check, said underlying revenue increased 12 per cent to £380 million ($624 million) in the three months to December 31, driven by strong sales of outerwear and non-apparel items, such as handbags, snoods and scarves.

That compared with analysts' consensus forecast for a rise of 3 per cent, according to a company poll of 12, and a first-half decline of 5 per cent.

Shares in Burberry, which have nearly trebled over the last year, were up 4.6 per cent at 0949 GMT, valuing the business at £2.7 billion.

"Burberry is beating its competitors on all counts and the trend is still getting better," said Evolution Securities analyst Dennis Weber.

On Monday, Richemont, the group behind Cartier watches and Chloe handbags, posted forecast-beating sales over the Christmas period, while last week Tiffany & Co said its profits should beat expectations after a surge in holiday sales.

Burberry said retail sales rose an underlying 16 per cent, including like-for-like growth of 10 per cent. The firm saw growth in all regions led by Europe and Asia Pacific.

"Our strategies in terms of digital media driving traffic to our stores, converting them, and innovative product, underpinned by operational efficiencies is really coming through in the numbers," said Cartwright.

She said Burberry's artofthetrench.com website, celebrating its trench coat, had received 5 million page visits since its November launch.

Wholesale revenue increased an underlying 5 per cent, driven by earlier and more frequent deliveries, while second-half guidance was raised to down 10-12 per cent from down 15 per cent.

Licensing revenue fell an underlying 3 per cent, with guidance for the full-year maintained at down 5-10 per cent.

Prior to Tuesday's update, analysts were forecasting an underlying pretax profit of £175-200m for the year to end-March 2010, according to Thomson Reuters I/B/E/S, versus £175m in the previous year.