Burberry profits jump after menswear relaunch

Fashion house Burberry today reported a 50% profits surge driven by sales of leather handbags and its relaunched menswear business.

Fashion house Burberry today reported a 50% profits surge driven by sales of leather handbags and its relaunched menswear business.

The company, famous for its red, black and camel tartan design, said its push for sales of non-apparel items – such as handbags, jewellery, and shoes – was paying off, with revenues in the category up 26% in the first half of its financial year.

Burberry, which took centre stage at London Fashion week in September, said its relaunched menswear business saw sales lift 17% in the six months to September 30.

The luxury clothing company saw pre-tax profits leap to £118m (€138.8m) in the first half, from £78.4m (€92.2m) last year. Revenues were up 21% at £641m (€754m).

Burberry chief executive Angela Ahrendts said the group was confident it could sustain its growth.

Burberry said sales in emerging markets – including China, India and Brazil - were up 46% and now account for 13% of total sales, up from 11% last year.

The company bolstered its operations in China in July, by buying out its franchise partner in the country for £70m (€82.3m).

The group said it has a remaining seven stores out of 50 left to transfer to its ownership and management, and expects the move to add £20m (€23.5m) to operating profits by 2011/2012.

Its retail division saw sales increase 20% worldwide and contributed 57% of total revenues. The company operates from 164 stores, 171 concessions and 45 outlets in 28 countries.

Looking ahead, the company said it expected to increase retail space by about 25% in the second half of its financial year.

Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, hailed the “stellar” profit rise but warned: “The second half may be rather more challenging, however, and the nature of a business focused more towards the luxury end could come under pressure.”

The group added it had invested in digital initiatives to boost brand awareness - such as a Facebook group which now has nearly three million fans.

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