Burberry sales soar as plunging pound helps foreign tourists buy luxury goods
Fashion firm Burberry has seen UK sales rocket as tourists flocking to London to take advantage of the Brexit-hit pound has sparked a luxury shopping spree.
The group said UK like-for-like sales raced more than 30% in the three months to September 30 after the plunging pound has seen overseas shoppers rush to London to snap up luxury goods at a better price.
Shoppers from China and the United States in particular have been travelling to the UK to hit the shops, according to the group.
It came as a welcome boost to Burberry and helped the group return to overall sales growth in its second quarter, up 2% against a 3% fall in the previous three months.
It said recent further falls in the pound were also now expected to add around an extra £125 million to full-year profits, up from July's estimate of £90 million.
Carol Fairweather, chief financial officer of Burberry, said the group was "delighted" with its sales performance in the UK, which accounts for around 15% of group-wide revenues and some 40% for the European region.
She said sales to Chinese shoppers in UK stores were up more than 20%, but added that the group also saw a recovery in demand from British shoppers over the summer.
Sales of designer bags were strong in particular, she added, especially Burberry's new equestrian-inspired satchel, the Bridle Bag.
Its second-quarter sales hike marks the group's first like-for-like growth for a year.
But it was not enough to prevent a drop in revenues over the first six months as a whole, down 4% to £1.16 billion with currency effects stripped out.
It continued to see an impact from falling tourism in Continental Europe after recent terrorist attacks, while the strong dollar has left sales in the United States lower as shoppers look elsewhere for luxury bargains.
Burberry added that sales in its wholesale arm dropped by 14%, excluding currency movements, dragged lower by a poor performance in the US and a 20% plunge in revenues across its beauty range.
Shares sank 6% as the wholesale revenue hit took the shine off a turnaround in its retail stores.
Burberry said it was on track to cut costs by around £20 million in the current financial year.
Analysts at Liberum cautioned: "Foreign currency benefits aside, Burberry struggles to drive meaningful growth."