Burberry's strong trading is continuing to be overshadowed by the weak yen after the upmarket fashion group's shares fell despite a 24 per cent rise in first quarter sales.

The 150-year-old clothing group said that headline sales, stripping out the effect of currency changes, rose by 30 per cent during the three months to June 30, 2007. However including currency movements first quarter revenues were six per cent lower than the headline figure, showing a 24 per cent rise in sales to £167.5 million.

Shares in Burberry fell from 675p to 661.5p in early trading. Burberry derives around a third of its operating profits from Japan where it licenses its brand to third parties who then manufacture products based on the British company's design.

During the first quarter, licensing revenues increased by six per cent, but factoring in currency movements, in particular the weak yen, sales during the first three months of the year fell by three per cent.

Burberry announced when it revealed its full year results, that it was changing its licensing agreements with some Japanese suppliers as well as terminating contracts with others.

The company is gradually changing its business mix to increase revenues derived from its retail arm with its own branded stores as opposed to wholesale, where Burberry sells its goods to other stores but does not exert any control over its image and presentation of its goods.

Retail sales during the quarter rose from £82 million to £97 million while wholesale revenue jumped from £37.7 million to £55.3 million.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive