-- adds broker comment, detail --
Burberry (LON:BRBY) delivered a mixed message for its latest quarter with higher sales accompanied by a cautious assessment over prospects.
The luxury goods giant has been battling weakening Asian demand and currency headwinds and Christopher Bailey, chief executive, conceded it had been a tougher quarter than expected.
Retail sales grew by 1% to £603mln, with like-for sales unchanged year-on-year, compared to a decline of 4% in the second quarter.
Burberry said its performance was below internal assumptions, but had been affected by a slump in Hong Kong and Macau where sales tumbled 20%.
Mainland China fared better with a return to growth, while Japanese revenue climbed 50%.
Bailey said the company was relying cut costs more to keep profits on track.
Lower performance related pay, more discretionary cost savings and a currency benefit would enable it to hit forecasts this year.
“Looking forward to FY 2017, the outlook for demand in luxury is uncertain and underlying cost pressures persist for the sector,” he added.
Canadian broker RBC said expectations going into the trading statement were very low.
Profits for the full year are likely to be £425mln, supported by £10m of currency benefit and the additional cost cuts.
Shares rose 3% to 1,148p though they have still shed 40% of their value over the past 12 months.