Fashion Week triumph gives Burberry’s sales a boost

Rosamund Urwin
14 Oct 2009

Burberry today smashed City forecasts and said that its triumphant return to London Fashion Week last month has given a boost to sales.

Shares in the British fashion house shot up 21p to 558p, the highest level since December 2007, as it delivered a 5% jump in like-for-like sales in its own stores between July and September. Analysts had expected flat comparable sales.

Burberry moved the catwalk show for its top-end Prorsum womenswear collection to the capital from Milan for London Fashion Week's 25th anniversary. “The show created a fantastic halo around the brand, which helps with demand,” chief financial officer Stacey Cartwright said.

It was one of the most sought-after tickets of the week with a front row which boasted actresses Gwyneth Paltrow and Emma Watson, the face of Burberry and Harry Potter star. Although the show was close to the end of the period covered by today's figures, she added that the company had seen “stronger sales trends in recent weeks”, with its London stores among the star performers.

Handbags and trench coats have been the best sellers in Britain and beyond as Cartwright said customers were looking for products with “longevity and heritage”. She added that “snoods” — a scarf and hood hyrbid — have also been very popular with shoppers.

But she remained cautious about the crucial festive season: “It is too early to tell how good Christmas will be.”

Comparisons are getting easier for the group now, with the last two weeks of this quarter comparing with a bleak period for the luxury goods industry last year after the collapse of Lehman Brothers.

Total sales in the three months rose 5% to £343 million from £328 million last year, helped by currency movements.

Stripping out gains from the weak pound, however, sales were down 5% as its wholesale arm suffered a 23% drop in revenues because of its department store customers cutting back.

Stores such as SAKS in the US have slashed their orders of luxury labels by up to a quarter but Burberry is starting to see re-orders from US department store customers after their products sell out. Cartwright said that there is a lag effect in its wholesale arm because stores make their orders six months in advance. She added that Burberry is especially happy with its childrenswear range as parents splash out to turn their offspring into Burberry-clad “mini mes”. The company opened its first childrenswear-only store in Westbourne Grove this year.