BURBERRY GROUP PLC 
LONDON (Reuters) - British luxury brand Burberry (>> Burberry Group plc) said exceptional demand from tourists and local shoppers in London for its bags and fashions over Christmas helped it to report a better-than-expected 3 percent rise in quarterly sales.
Tourists have been taking advantage of a drop in the value of the pound since the Brexit vote in June to buy luxury goods in the British capital rather than other European cities.
Known for its British-made trenchcoats, Burberry said comparable sales in its home market, which make up about 10 percent of its total, rose by 40 percent in the three months to the end of December.
Sales are thought to also have been boosted by wealthy Britons buying at home, rather than going on shopping trips to the continent.
Christopher Bailey, chief creative and chief executive officer, said the group had seen "strong demand for new products".
Bailey will relinquish the chief executive part of his dual role to Italian Marco Gobbetti, previously at Celine, in July.
Gobbetti starts work at Burberry in Asia next week, however, and he will have a new chief financial officer, Julie Brown, at his side as he works to bring Burberry's sales performance to the levels of rivals such as LVMH (>> LVMH).
Burberry, which reportedly received an approach from U.S. rival Coach (>> Coach Inc) last year, said retail revenue increased by 4 percent on an underlying basis to 735 million pounds ($907 million).
It said it expected pretax profit to be in line with market expectations, which stand at about 440 million pounds. Its financial year runs until the end of March.
CHALLENGE FOR MANAGEMENT
Shares in Burberry, which have increased 24 percent in the last six months helped by the weaker pound, were trading up 1.9 percent at 1,624 pence by 1130 GMT.
Citi, which rates Burberry as "neutral", said festive trading was "solid", with sales 3 percent above its forecasts.
Its analysts said they appreciated the group's cost saving initiatives and return to comparable sales growth, but management changes meant there were risks to successfully implementing its strategy.
Burberry said on Wednesday that an efficiency plan, based on simpler ranges and focussing on areas of weakness like bags as well as improving customer service, was already working.
Its "Banner", "Buckle Tote" and "Bridle" bags were highlights of the season, investor relations director Charlotte Cowley said, as was its latest runway collection.
She said comparable sales in Asia-Pacific had returned to growth, helped by mainland China, where a campaign fronted by actor and singer Kris Wu was a hit.
There was also improvement in Hong Kong, although sales continued to decline, she said, while demand was uneven in the Americas.
($1 = 0.8102 pounds)
(Editing by James Davey/Keith Weir)
By Paul Sandle
