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INTERVIEW-Burberry eyes expansion in U.S.

Published 05/28/2009, 03:27 PM
Updated 05/28/2009, 03:48 PM
BRBY
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* Going after new stores in Americas though demand weak

* Sees China, Brazil key in emerging markets

* Shares up 0.6 pct

By Aarthi Sivaraman

NEW YORK, May 28 (Reuters) - Burberry , purveyor of fashionable clothes, watches and other luxury goods, wants to exploit lucrative real estate opportunities to open new stores in the United States, its chief executive said on Thursday.

The British company is among several upscale companies whose demand has slackened in the recession, which has forced even affluent consumers to turn frugal.

While other retailers apply the brakes on expansion, Burberry plans to open 10 to 15 stores this fiscal year, with five stores planned in North and South America.

New U.S stores would likely be in bigger cities such as New York, Los Angeles, and Boston where tourist traffic is high and Burberry already has stores, Burberry CEO Angela Ahrendts told Reuters.

Expansion in the United States would be "one of the biggest opportunities the company has," Ahrendts said.

"You are getting much better real estate deals," she added. "I would argue that we are actually getting a greater return on the new investments than we were getting before."

The maker of raincoats and handbags known for its camel, red and black check pattern, already has 119 company-operated stores around the world as of March 31.

Burberry is planning for a tough economic environment, but that it hopes to underpin its 2009 profit with cost cuts. [ID:nLJ647605]

"Business is absolutely impacted, (but) maybe we've been a little more resilient," Ahrendts said, adding it was possible to gain market share if a brand outperformed its rivals.

The 153-year-old company said earlier in May it shed 800 employees, or 15 percent of its workforce, as it targets 50 million pounds (roughly $79 million) in cost savings.

Despite a 50-percent increase in revenue in emerging markets in the past year, its fortunes in specific markets have changed vastly, Ahrendts said. For example, Russia and Dubai were strong markets a year ago but are now among the toughest.

Burberry is currently focused on China and Brazil, she said.

The company' shares closed at 380.75 pence. (Reporting by Aarthi Sivaraman; Editing by Derek Caney) (1 pound = $1.5934)

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