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Burberry Quarterly Sales Rise as Europe Offsets Hong Kong

Burberry

Burberry Group Plc, the U.K.’s largest luxury-goods maker, reported a 10 percent increase in first-quarter sales as strong demand in Europe compensated for a slump in Hong Kong.

Retail revenue advanced to 407 million pounds ($637 million) in the three months through June, London-based Burberry said Wednesday in a statement. Analysts predicted 414 million pounds, according to the median of 17 estimates compiled by Bloomberg. Comparable sales climbed 6 percent, beating the 5.5 percent estimate.

Strong demand from traveling luxury consumers in France, Italy and Spain buoyed sales in Europe, the Middle East, India and Africa, while store visits improved in the Americas through the quarter after a soft start, Burberry said. Revenue fell in the Asia-Pacific region led by a double-digit percentage decline in Hong Kong, which remains “challenging,” the company said.

The performance holds “no negative surprises,” said John Guy, an analyst at MainFirst Bank in London. The success of high-margin products such as cashmere scarves and ponchos “bodes well in terms of the product mix.”

Currencies will boost full-year profit by about 20 million pounds if they stay at current rates, Burberry also said, raising a forecast from May by 10 million pounds. Still, the benefit will be offset by a “more adverse geographic mix,” according to the luxury-goods maker, which otherwise maintained its guidance.

Burberry is battling against the influences of a strong pound and lower demand in Hong Kong, which is seeing fewer visits from wealthy Chinese shoppers. To account for currency fluctuations and stoke demand in the island city as well as within China, the company in April cut trenchcoat and scarf prices in both destinations, while raising them in Europe.

Source: Bloomberg