A positive start to the year sees Burberry’s sales soar

As Burberry announces positive Q1 figures, Nick Raynor investment adviser at The Share Centre, explains what this means for investors.

"The luxury brand reported Q1 underlying sales soared by 34% compared to the year before, and double-digit balanced growth was seen across all aspects of the company in all regions. Total revenue for the period to 30 June increased from £282m to £367m. This strong performance was largely driven by demand in China and the region continues to be at the forefront of Burberry's expansion plans, which will encourage investors seeking growth.    

"Last year Burberry acquired 50 new stores in China which have proved to be a master stroke. 20% of the 49% increase in retail sales was derived from the region compared to 15% growth in other areas. The company's wholesale revenues rose by 11% compared to last year. Investors will be pleased to hear Burberry has increased its growth expectations from this part of the business showing a good sign of confidence.

"Investors may be wary of the retail sector due to tough trading conditions and consumers feeling the pinch. However, Burberry recognises the global economic challenges and remains confident in its strategy. It is interesting to see that despite these difficult times the average selling price of garments in London rose by over 10%.  

"Burberry's figures are faultless and the outlook going forward looks encouraging, but we continue to list the luxury retailer as a ‘hold' for now as we believe the share price is fairly valued. However the company is looking attractive so the braver investor may want to take a closer look."