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More expansion for Burberry following retail success

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Luxury fashion brand and retailer Burberry reported a underlying total revenue increase of 17 per cent year-on-year in its first half results published today.

Retail trading has been particularly strong for the company with underlying revenues in this area increasing 20 per cent in total and retail sales up nine per cent on a like-for-like basis.

Mainline stores have seen double digit sales increases in both Q1 and Q2 as 20 new stores opened internationally during the period.

Angela Ahrendts, CEO of Burberry, commented: “The momentum at Burberry continues, with 21 per cent revenue growth and a material improvement in the gross margin in the first half.

“While mindful of our strong second half last year, we currently expect adjusted profit before tax for the full year to be in the top half of market expectations.”

Burberry announced in September that it was beginning retail operations in China and during the first half it opened two stores in India and its first in Brazil.

In H2 the retailer plans to increase selling space by 25 per cent, 15 per cent of which will be in China.

Ahrendts added: “Continued product innovation, digital and customer service initiatives, coupled with the recent acquisition of our Chinese retail operations, underpin our confidence in delivering long-term sustainable growth.”

In a report published this morning, analysts for Investec Securities, Katherine Wynne and David Jeary, advised investors to buy Burberry shares and backed its plans for further expansion.

Wynne and Jeary wrote: “Whilst the temptation must be to lock in some profit after the very strong run Burberry has enjoyed over the past quarter, we continue to find the global growth profile highly attractive.”

“We see some profit-taking as likely today given almost 20 per cent relative outperformance vs the market over the past quarter.

“We see continuing positive earnings momentum, and believe 20 per plus EPS growth is likely over the next two years.”

Published on Wednesday 13 October by Editorial Assistant

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