Burberry upgrades forecasts over strong Asian and US sales

Luxury fashion house Burberry has said sales are set to be higher than previously indicated due to a better than expected performance in Asia and the US.

The company said sales in the three months to 27 March are now expected to jump between 28% and 32% compared with a year earlier.

Burberry has benefitted from stores being open again in China, South Korea and the US, even though sites across Europe remain shut due to Covid-19 restrictions.

The company also said it had been focusing on selling more products at full price, rather than with discounts, with more customers paying the ticketed price.

Russ Mould, investment director at AJ Bell, suggested wealthy customers who would typically travel to Europe to spend big in Burberry appear to be shopping in local Burberry stores instead.

He said: “A lot of its business has historically come from Asian tourists taking trips across Europe. They like to spend big and its products are highly desirable.

“The restrictions on international travel are only in the nascent stages of being lifted and the return of tourist-related sales may not pick up in earnest until 2022.

“Therefore, current sales are likely to be driven by domestic customers. In January it flagged good full-price sales in places like the Americas, mainland China and Korea.

“As more regions start to come out of lockdown restrictions, there is a sense that we could see a huge spending spree as a lot of people fortunate to have been working throughout the pandemic may have amassed considerable spare cash.

“The idea that we could see the Roaring Twenties is very real and luxury goods companies such as Burberry could be major beneficiaries.”

In the UK, officials have estimated high and middle income households have been the biggest beneficiaries financially from the Covid-19 crisis, accumulating savings of £180 billion, with around £9 billion expected to be spent in the next year alone.