Burberry in defiant mood despite growth slowdown

The global credit crunch and the worst retail environment in a decade have not stopped luxury fashion house Burberry - yet.

The company still best-known for its distinctive check designs says sales continue to rise, but the speed of growth has slowed. Sales in stores rose at 4.5% in the three months to the end of June, against a 6% rise the previous six months.

Only 7% of Burberry sales are in the UK, meaning the company is hardly a barometer for the health of the British High Street. But analysts will take heart from signs that the luxury industry is defying the downturn.

The troubled Spanish arm remains the only blot on the success story, with sales in Asia and America continuing to soar. The latest must-have item for the fashion-conscious woman-about town is the Lowry handbag, which at a mere £1295 is a bargain compared with its predecessor - the £11,000 Warrior.

Total sales for the period, including new-store openings, are up 22%. Chief executive Angela Ahrendts claims that Burberry remains under-exposed across the world.

HSBC, which rates the shares a buy, agrees. It said in a note to investors: "Burberry's less-mature state of development than its peers in many markets should enable it to gain new clients."

It is the only major luxury brand with a British heritage, giving it a niche position. Burberry shares have suffered with the rest of the retail sector, down from a year's high of 681p. Today they fell 3¼p to 393¾p.

Finance director Stacey Cartwright has been working to improve the company's supply chain, so that goods ship when they should. She said today that while more work remained to be done, "we have certainly made enormous improvements".

Ahrendts said Burberry had made a good start to the year in "an increasingly challenging environment".