Burberry retail success in challenging environment

Burberry's retail operation enjoyed a strong run up to Christmas but the company took a hit in its wholesale division and said the global environment would remain challenging.

The luxury fashion brand said total revenue rose 9% to £613m in the three months to December 31st.

Retail revenue, which makes up the bulk of sales, rose 13% to £464m on an underlying basis, driven by customers choosing the more expensive items and by a strong performance in outerwear.

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However, wholesale revenue fell by 5% to £120m on an underlying basis in the third quarter.

For the second half of its financial year Burberry now expects underlying wholesale revenue to be down low to mid single-digit percentage year-on-year, compared to a previous estimate that it would be broadly unchanged.

The firm said this reflected lower sales to small specialty accounts in Europe.

The United States, Asia Travel Retail and Emerging Markets are expected to continue to grow.

The company, which has struggled to maintain sales in the Far East, saw the Asia Pacific region post the strongest rise in revenues, up 16% to £242m on an underlying basis.

This compared with growth of 4% in Europe and and the Americas.

Chief Executive Angela Ahrendts the firm had benefitted from a particularly strong week in the run up to Christmas.

"In an otherwise difficult quarter, core outerwear, mens and digital all outperformed," she said.

"We expect the external global environment to remain challenging, but see continued opportunities to drive productivity in our existing business, while investing for growth in under-penetrated regions, product categories, channels and mediums."