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Burberry beats hard times
LONDON, England (Reuters) -- Shares in Britain's Burberry jumped on Tuesday after the luxury fashion label posted strong sales growth in its second half despite an uncertain economic climate and a deadly virus hurting its Hong Kong market. Burberry, whose signature beige raincoat with checked lining is worn by celebrities and royalty, reported total revenue growth of 22 percent from retail and wholesale sales and licensing for its second half ended March 31. Underlying retail sales, excluding the effects of currency movements and store acquisitions in Asia, rose 30 percent. "More than ever, Burberry remains our favourite stock in the sector,'' said Merrill Lynch analyst Antoine Colonna, who added that the firm's 2003 sales had beat its forecasts. Shares in the firm were six percent, or 14 pence, higher at 246-1/2p by 0812 GMT, valuing the firm at around 1.1 billion pounds. The stock has outperformed London's general retailers sector by around 20 percent since its flotation in July 2002. Hong Kong virus fearsBurberry said fears about the virus in Asia and world political troubles had begun to hurt its retail performance during March, particularly in Hong Kong and at home. Chief Financial Officer Mike Metcalf said the SARS virus had hit retail sales in Hong Kong from around mid-March but noted this region only accounts for less than 10 percent of the group's total retail sales. Carried around the world by travellers, the SARS virus has spread alarmingly this month and has begun to hit a wide range of businesses, especially airlines. Tourism in the worst-affected areas, which include Hong Kong, has been ravaged. "It clearly affected travel both in and out of Hong Kong (from about mid-March on),'' Metcalf told reporters in a conference call. ``And also the famous Hong Kong consumer has been choosing to stay rather more at home and not get out there and shop as usual.'' Merrill Lynch agreed the effect of the deadly virus threat may not be significant for Burberry. "Neither Hong Kong nor Singapore are key markets for the company,'' analyst Colonna said. The firm said underlying total sales in its wholesale business, which serves department stores across the world, grew by six percent during the second half. It said it still expected high single-digit wholesale volume growth over the full spring and summer 2003 season. Total underlying licensing revenue in the second half grew nine percent, the firm said.
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