Luxury fashion brand Burberry has revealed strong growth across Asia and the US as it wins over younger customers with cash to spend.
Bosses said they now expect profits will hit around £500 million in the financial year – a jump of 35% – with strong sales of coats, shoes and leather goods.
The company added that it has continued to shift away from discounting products and is selling more items at full price instead.
But while sales in Asia and the US were impressive, there was a weaker performance in Europe as rich tourists who usually travel to the area continued to stay away due to the pandemic.
Prior to Covid-19, around 40% of sales in Europe were to foreign tourists.
Burberry said sales in the region fell 4%, pointing out that domestic customers are offsetting the fall in foreign shoppers, although not quite enough to return to pre-pandemic levels.
But in Asia the company revealed it outperformed in South Korea and saw strong growth in China.
Store sales in China rose 15% in the three months to December 25 compared with a year ago, and South Korea was up 28%.
However, there was a weaker performance in Japan and the rest of the South Asia Pacific region “due to limited tourist traffic”, Burberry said.
Our in-store experience is also being rolled out extremely well and really drawing in a new generation of luxury consumersJulie Brown, Burberry
Finance chief Julie Brown said: “Our collections attracted new, younger customers to the brand.
“Our in-store experience is also being rolled out extremely well and really drawing in a new generation of luxury consumer.”
She praised some of the strongest growth in the US.
“The Americans’ performance has been standout. We’ve had very strong growth,” she said.
“If you look at full price in America in the last three quarters, we’ve posted 100% growth, then just over 80% growth, then now just over 70% growth, so it’s been doing incredible well.
“It’s being driven by new consumers coming to the brand, so clearly the brand perception is strong.”
Inflation is starting to take its toll, she added, with pressure on the supply chain and logistics.
But she said: “We are in a beneficial position as a company in the sense that we’re a high margin business.
“And therefore we don’t see this has been a major headwind but we are actively managing it at the moment to be able to maintain the gross margin.
“We’re also anticipating wage inflation, which, again, is going to be a headwind for business.”
She added that price rises “could be likely”.