Burberry boosted by trench coats

Burberry Group Plc, the British luxury-goods maker whose founder created gabardine fabric, said first-half profit rose 32 percent on higher sales of trench coats and the introduction of metal-studded Knight handbags.

Net income climbed to 66.1 million pounds ($137 million), or 14.9 pence a share, in the six months through September from 49.9 million pounds, or 11.1 pence, a year earlier, the London-based company said yesterday.

Burberry, which sells the Knight range for 1,595 pounds, expanded its selling space by about 12 percent in the half. It plans Budapest, Copenhagen, Los Angeles and Venice stores in the second half to fuel demand amid signs growth in the 170 billion-euro luxury-goods market may slow. Sales at Burberry's own stores are more profitable than those via third-party retailers.

"Burberry has been successfully executing its strategy," Yasuhiro Yamaguchi, an analyst at UBS AG in London who has a "neutral" rating on the stock, said before the results. "Growth should continue, but a cyclical slowdown is likely to lower market expectations for future growth rates."

The first-half earnings were "consistent with" the company's forecast for annual results, Chief Executive Officer Angela Ahrendts said in the statement. Sales increased 15 percent to 449 million pounds, the clothier said on October 16.

Burberry shares rose 26 pence, or 4.7 percent, to 585.5 pence in London. The stock has fallen 9 percent in the past year, compared with a 1.7 percent gain by the 14-member Bloomberg European Fashion Index.

Sales gains in the luxury-goods industry may slow to between 8 percent and 12 percent in 2007 as a two-year growth spurt weakens and gains by the euro crimp revenue at European companies, HSBC Holdings Plc analysts said in April.

Growth rates in 2005-2006 were as high as 18 percent, HSBC said.

Bloomberg News

(China Daily 11/15/2007 page16)