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Burberry forecasts high profits

Burberry, the luxury goods giant famous for its upmarket raincoats and handbags, has forecast profits will come in above market expectations this year and next, further fuelling hopes demand has returned to the top end of the retail sector.

LVMH, the maker of Louis Vuitton handbags, drink brands including Dom Perignon and premium whisky Glenmorangie, last week posted a forecast-beating 13% rise in comparable sales for the first quarter, helped by a strong rebound in the US and Europe.

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Angela Ahrendts, Burberry’s chief executive, said: “While the pace and level of the global economic recovery remain unclear, we remain confident our strategies will continue to build momentum in the business.”

She added the 154-year-old company, famous for its camel, red and black check, plans to drive growth by investing in new regions, such as Brazil and India, as well as new initiatives and digital commerce.

The company said underlying revenue had increased 6% to £707 million – a further sign the wealthy appear to have put the financial crisis behind them. Analysts had forecast a 5% increase.

Chief financial officer Stacey Cartwright said the outcome reflected particularly robust retail demand for items such as handbags, small leather goods, shoes and soft accessories.

She also said sales of Burberry’s top-end products, such as its Prorsum range, had recovered well.

“That was a little softer this time last year and that’s recovered very nicely,” she said.

“By region, Hong Kong, the UK and the UAE were the standout performers.”

Shares in Burberry, which have more than doubled over the last year, were down 1.5p at 706p, valuing the business at around £3.1bn.

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