The impact on tourism of the Sars virus and the war in Iraq hurt sales in the first part of the year, the firm said in a trading statement.

But sales have bounced back in recent weeks, helped by nine new stores.

Shares in Burberry, which has 70 stores worldwide, closed up 3% at 283p.

'Negative territory'

But the company said its UK retail sales had gone into reverse in recent months, and were not likely to pick up again until the end of the year.

Chief operating officer Mike Metcalf said: "Since March we've been in negative comparable store results territory.