London—Burberry became the first major luxury house today to appear to shrug off the slowing Chinese economy. The British luxurygoods company reported its total sales for the six month ending March 31 was up some 19% to 1.3 billion pounds (about $2.2 billion).
The figure was in line with analysts’ forecasts and was strengthened by double-digit sales growth in China and South Korea.
Retail sales, which account for 70% of Burberry’s volume, were up 13% to 923 million pounds. Comparable store sales were up 12% also driven by double-digit growth in Asia Pacific.
Currency Exchange to Affect Profit?
“We see great opportunity for us still in China, both at home in China and when the Chinese luxury consumer travels abroad,” said Carol Fairweather, Burberry financial chief.
Analysts seemed impressed by the results. According to Thomas Chauvet, analyst at Citigroup, “Burberry’s results today confirm the brand’s superior revenue growth profile in a context of subdued luxury demand patterns since the second half of 2013 and few signs of improvement this year.”
Like other luxurygoods company such as Prada, Burberry said it expects “material adverse impact on reported profit” due to current exchange rates this year as the pound continues to strengthen. In January, Burberry had warned that exchange rates would weigh on results in the fiscal second half and beyond.
Changes in the company’s management are also being watched closely. CEO Angela Ahrendts is turning over the top executive role to chief creative director Christopher Bailey who take on a dual role.
“With the management transition well underway, Burberry begins a new year with Beauty firmly established as the fifth product division and investment in flagship markets, such as Shanghai, further increasing the brand’s appeal to the core luxury customer at home and when traveling,” said Ahrendts.
Although Ahrendts is apparently free to exit Burberry this month to head Apple’s retail operations, no last day has yet to be confirmed. Some reports say she could remain on through June, allowing her to collect an 8 million pound bonus based on performance the last few years.
Bailey also must prove himself as chief executive given that his background has been in design and product marketing.