LONDON (Bloomberg) – Burberry Group Plc, the UK's largest luxury retailer, posted a 27 percent gain in first-quarter sales, beating analysts' estimates, led by growth in Asia and deliveries to wholesale customers.

Revenue in the three months ended June 30 increased to £291 million ($436 million) from £229 million a year earlier, the London-based company said yesterday. The average estimate of four analysts compiled by Bloomberg was £259.5 million. Excluding Spain, where Burberry is closing a factory, sales climbed 30 percent to £282 million.

Demand for luxury goods is accelerating as distributors restock and consumers spend more on high-end apparel and accessories. Burberry, known for its plaid designs, plans to increase capital spending by 86 percent this year, opening 20 to 30 stores in the Americas and Asia-Pacific regions, CEO Angela Ahrendts said.

"It's a massive beat versus expectations," said Erwan Rambourg, an analyst at HSBC in London, who had estimated sales of £260 million. "You can be excited by retail."

Burberry rose as much as 2.6 percent in London trading and was up 4.5 pence, or 0.6 percent, to 794 pence yesterday morning. The shares have risen 32 percent this year, making Burberry the sixth-best performer in the UK's FTSE 100 index.

The "early read" on autumn-winter 2010 collections, which arrived in stores from June, is that "momentum" is continuing, CEO Stacey Cartwright said on a conference call. "We continue to outperform almost irrespective of what the local economies are doing," Cartwright said.

Excluding Spain and currency swings, revenue at Burberry stores open at least a year increased ten percent in the quarter. Same-store sales increased more than ten percent in the UK, Italy, Germany, Hong Kong and Taiwan. The Americas grew at a "low single-digit" pace as promotional activity was reduced for a large part of the quarter, the company said.

Burberry increased average retail selling space by eight percent in the quarter, opening eight stores. That boosted retail revenue by 6 percent on an underlying basis, the company said. Burberry said it plans to increase average retail selling space by about ten percent this year.

Wholesale revenue, which accounts for about 30 percent of sales, gained 46 percent, excluding Spain and currency swings, the company said.

That represented a rebound from the fourth quarter's 20 percent drop. Burberry said wholesale revenue will increase by a "high-teens percentage" in the six months through September 30.

"We are seeing significant increases in all regions except Europe, where the planned strategic rationalisation of small specialty accounts continues," Cartwright said, citing "some traction" with US department stores, which are giving more space to the brand, especially for spring-summer 2011 lines.

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