Burberry says a bounce back for sales in Asia, as Europe continues to suffer heavy coronavirus restrictions, has been strong enough to lift its annual profit forecasts.
The luxury goods firm issued an unscheduled trading update on Friday to reveal a “strong rebound” for sales at the start of 2021, led by China and South Korea.
As a result, Burberry said it expected like-for-like sales in the final quarter of its financial year ending 27 March to be 28% to 32% higher than the same period last year.
The start of 2020 saw Burberry suffer as China was mired in COVID-19 restrictions which later spread to Europe.
Lockdowns have taken a big toll on sales of luxury goods such as handbags and fashion because people have been unable to go out and flaunt their wares while travel restrictions have also hit usually reliable tourism income.
The company has also been among firms warning of a significant hit to UK sales after a scheme allowing VAT-free shopping for overseas tourists was scrapped.
Burberry said: “”Since December, we have continued to see a strong rebound and now expect revenue and adjusted operating profit to be ahead of consensus expectations.”
It forecast a decline in revenue for its financial year of between 10% and 11%. Analysts had pencilled in a figure of 13%.
Shares were more than 8% up in early deals after rising 10% at the open – hitting levels not seen since January last year.
The update offered encouragement to Burberry’s chief creative director Riccardo Tisci as he seeks to stamp his own, more streetwise, authority on the brand as it emerges from the health crisis.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said of the update: “You can’t keep a classic down for long and, in testament to the refreshed creative direction, Burberry’s sales have finished the year on a high.
“There were concerns the fashion icon’s products would fail to resonate, with the pandemic stopping customers from splurging on big-ticket clothing.
“The sales gap isn’t as severe as feared though, and is a textbook case of the value of a strong brand.”