(Bloomberg) -- Burberry Group (LON:BRBY) surged as the U.K. luxury brand got a boost from a new designer whose revamped looks are selling well in China.
Store sales rose 4% on a comparable basis for the three months through June, double the rate analysts predicted. New products from Riccardo Tisci, formerly of French fashion house Givenchy delivered strong double-digit percentage growth, the trench-coat maker said Tuesday.
The shares rose as much as 6.4% in early London trading, the most since November on an intraday basis.
Sales in mainland China rose in the mid-teen percentages, even as the country reported its slowest economic growth in nearly three decades. Chinese policies including cuts to sales taxes and import duties are encouraging shoppers to rein in foreign shopping trips and instead spend at home.
The strong report from Burberry, the first European luxury company to report sales this quarter, could boost prospects across the sector amid questions about the resilience of Chinese demand.
The update “should reassure with a healthy uptick in mainland Chinese consumption,” MainFirst analyst John Guy said in a note. Results were better than expected across Asia, where protests in the key Hong Kong shopping hub were seen as a possible drag.
Store Closings
Interest in Tisci’s fresh looks helped offset the impact of continued store closings. Burberry has been scaling back in non-luxury and discount locations as it aims to boost perception of the brand.
A year after Tisci’s arrival at Burberry, his designs made up more than half of products in stores by the end of the quarter, the company said.
The designer has plastered a flashy new monogram print across duffel bags, hoodies and shoes in a bid to make the brand more visible. Alliances with top models, pop stars and style bloggers have helped to amplify his message online.
Rihanna, Madonna, and Irina Shayk have all been early adopters of the brand’s new look.
(Updates with shares in third paragraph, analyst comment in sixth paragraph)