PARIS: British luxury brand Burberry has reported faster than expected sales growth in its financial first quarter but warned a strong pound would hit this year’s profits.

Burberry reported retail revenue of 370 million pounds ($629.6 million) for the three months to June 30, which beat analyst forecasts of around 350 million pounds. Sales growth reached 12 percent on a like-for-like basis, compared to an 8 percent consensus analyst forecast.

Bigger luxury labels such as Louis Vuitton and Gucci have seen retail sales growth collapse to below 5 percent from above 10 percent three years ago as consumers tired of global brands they saw as too ubiquitous.

Burberry, known for its camel trenchcoats, has kept sales growing in China, unlike rivals that suffered more from a crackdown on corruption and conspicuous spending. But sterling’s strength is taking its toll on the company’s earnings power.

Burberry’s fixed costs are in pounds and its revenue comes in a variety of currencies. It said exchange rates would reduce this year’s retail and wholesale profit by about 55 million pounds and would narrow its adjusted operating margin to around 16 percent from 17.5 percent.

“Despite driving best-in-class top-line growth, the continued margin pressure at Burberry remains a concern, and today’s results do not help to improve the profitability gap that exists between Burberry and its luxury peers,” Bernstein said in a note.

It estimated the operating profitability gap between Burberry and top players such as Kering, the group behind Gucci, and Prada to be around 7-10 percent.

Morgan Stanley said it expected consensus expectations for profit before tax to be cut by around 3-4 percent.