By Maitane Sardon

Shares in European luxury companies rose across the board Friday after U.K. trench-coat maker Burberry reported better-than-expected results, fuelling investor optimism about a turning point for the sector.

The U.K. luxury group, which is in the middle of a turnaround plan, said comparable store sales fell 4% on year, while analysts were expecting a 12% decline. It said its second-half results could broadly offset a loss in its first half after booking retail revenue of 659 million pounds ($814.1 million) in the third quarter.

Burberry shares soared 15% in opening trade following the update. Luxury bellwether LVMH rose 3%, while French peers Kering and Hermes climbed 9.5% and 2.4%, respectively. Italian high-end brands Salvatore Ferragamo, Brunello Cucinelli, and Moncler rose 7.4%, 2.2% and 5.3%, respectively. Cartier Owner Richemont was also up 2.7%.

There are several moving parts behind the strong results, Bernstein analysts said in a research note following the update. The company has been actively exiting inventory through discounts throughout its full-price and outlet retail network and seems to have hit the nail on the head with its new back-to-basics strategy. Furthermore, Cartier Owner Richemont, which reported results last week, has pointed to an overall improvement in cyclical demand that is affecting all nationalities, the analysts said.

Burberry's results come after peers Richemont and Brunello Cucinelli posted strong business updates for the fourth quarter, raising hopes of a sector recovery after a year of waning demand.

Write to Maitane Sardon at maitane.sardon@wsj.com

(END) Dow Jones Newswires

January 24, 2025 05:11 ET (10:11 GMT)

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