Luxury fashion company Burberry PLC posted sales figures at the top end of expectations on Wednesday due to strong demand for its handbags and casual outerwear, lifting its share price to a 21-month high.
Burberry, known for its distinctive beige plaid, said sales in stores open more than a year rose by 5 percent in the quarter to Sept. 30, compared with a flat performance a year ago.
The company's stock closed up 5.3 percent at 565.5 pence on the London Stock Exchange.
"Today's statement confirms our view that the Burberry brand is likely to continue to outperform the rest of the luxury sector in the current difficult environment," said Dennis Weber, an analyst at Evolution Securities."This remains the only real self-help story in the sector with good visibility, which is also underlined by the full-year cost savings target of 50 million pounds."
The company also reported that revenue dropped 5 percent at constant currency rates over the quarter to 343 million pounds, after a 23 percent drop in wholesale revenue offset a 14 percent rise in retail revenue.
But the overall figure still beat most analysts' forecasts. Katharine Wynne, analyst at Invetec Securities, said she expected upgrades on the company.
The positive trading update underscores Burberry's recent resurgence. The company made a splash when it returned to London Fashion Week this year after almost a decade at the Milan shows and it has made headlines with a new stable of celebrity models, including "Harry Potter" actress Emma Watson.
The 153-year-old company has also changed its offering with the times — its traditional trenchcoat, once worn during World War I, was transformed this year into a mini, puff-sleeved pink satin version.
It has taken steps to mitigate the economic downturn, reducing inventory and beginning a 50 million pound cost-cutting program.
With 119 stores around the world, Burberry said Wednesday it planned to open about 15 stores this fiscal year, mainly in Asia and the Americas, a target that is at the top end of its previous guidance.
Britain was once again one of the company's best performing markets over the quarter as visitors to London took advantage of the week pound.
Spain remained the weakest part of its operations, with revenue falling 31 percent on a reported basis from 80 million pounds ($128 million) a year ago to 55 million pounds in the first half of this year.
The company reported gains in all other regions.
The fall in wholesale revenue — that is, to department stores and independent retailers — included a 10 percent decline from its own actions, such as the closure of its Thomas Burberry stores which were aimed primarily at the Spanish market. The remaining 13 percent drop was due to customers adjusting inventory levels.