Business

Burberry sales helped by Chinese demand

Burberry label on clothes Image copyright Reuters

Burberry has reported increased sales in the three months to June, helped by demand from China.

The fashion retailer started the 2017-18 year with a 4% increase in like-for-like sales. In China, sales growth was in the "mid-teens".

It is the first set of results to be reported under new chief executive Marco Gobbetti.

Christopher Bailey stood down as chief executive earlier this month to become president and chief creative officer.

Mr Gobbetti said: "We are pleased with our performance in the first quarter, while mindful of the work still to do.

"This is a time of great change for Burberry and the wider luxury industry. I look forward to building on the foundations Christopher and the team have put in place and creating new energy to drive growth."

Burberry shares rose 5% in early trading after the sales figures were announced.

Retail sales generated £478m in the three-month period, helped by strong performances in the UK and mainland China.

'Out of the doldrums'

The company wants to save at least £100m by 2019 and said it is on track to deliver £50m in savings in 2018.

The rise in sales came after Burberry reported a fall in annual profits for the 2016-17 year.

Steve Clayton, a fund manager of Hargreaves Lansdown, said: "This is an encouraging performance from Burberry, which looks to be at long last pulling out of the doldrums.

Mr Clayton warned that in the near-term, growth could be hampered by a slowdown in the number of stores being opened.

He also said that Burberry is likely to halt distribution to some of the third-party retailers who currently stock its products.

"Some of them are not upmarket enough for Burberry and are not where they want their brand to be seen, so they will stop selling to them on purpose," he said.

"But with an acceleration in new product launches set for the second half of the year, the underlying progress at Burberry should improve steadily," he added.

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