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BURBERRY sales rise 27%, beating expectations

British luxury brand BURBERRY posted a 27% gain in first-quarter sales, beating analysts’ estimates, led by growth in Asia and deliveries to wholesale customers.Revenue in the three months ended June 30 increased to GBP 291 million from GBP 229 million last year.

BURBERRY plans to increase capital spending by 86% this year, opening 20 to 30 stores in the Americas and Asia-Pacific regions, CEO Angela Ahrendts said.The first sales figures for the autumn-winter 2010 collections, which arrived in stores from June, indicate that the “momentum” is continuing, CFO Stacey Cartwright said on a conference call. “We continue to outperform almost irrespective of what the local economies are doing,” Cartwright said. Wholesale revenue, which accounts for about 30% of sales, gained 46%, excluding Spain and currency swings, the company said. “We are seeing significant increases in all regions except Europe” Cartwright said, citing “some traction” with U.S. department stores, which are giving more space to the brand, especially for spring-summer 2011 lines.

Oliver Petcu of CPP believes Burberry’s continued success worldwide, defying the international crisis, is mostly due to two factors. First, Burberry collections price point is lower than most of the major international competing luxury brands, thus reaching a wider audience which has translated into a ”democratic luxury” positioning and perception. Secondly, the fact that BURBERRY stores include all its lines, from the upscale Prorsum to Sport represents another major competitive advantage. Mention should also be made that Burberry’s international expansion which is mostly done through franchising operations, has been greatly helped by the lower initial investment costs in the store fittings, in most cases half the cost of competing brands such as Gucci.   

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