Burberry, the clothing and accessories manufacturer, is planning further expansion in the US and Europe after strong sales of luxury handbags and raincoats helped profits grow last year.

The retailer said most of the planned expansion would be in Europe and America. Burberry has 292 retail outlets, including 40 in the US, where it would add 10 more.

Burberry, which recently shut its polo shirt factory in south Wales, said the popularity of its luxury handbags had helped raise sales of accessories by 15%. Its Manor handbag, which costs £800, sold out in the UK after a high-profile ad campaign featuring Kate Moss.

Shares in Burberry closed down 25p yesterday at 667.5p after full-year results showed underlying profits were up 12% at £185m, missing forecasts of £192m, with underlying revenue up 15%.