By Mark Potter

LONDON, May 26 (Reuters) - Luxury group Burberry (BRBY.L) plans to step up expansion, with a focus on emerging markets, e-commerce and menswear, after strong sales of coats and leather goods helped it beat profit forecasts.

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The 154-year-old British group, known for its camel, red and black check pattern, said on Wednesday 26 May it would almost double capital spending to 130 million pounds ($186 million) in its 2010-11 financial year, despite an uncertain economic outlook.

"We do believe that Burberry, distinct from what's happening in the marketplace, has got specific momentum in the brand right now," chief financial officer Stacey Cartwright told reporters, saying the group was reaping the benefit of past investment in IT systems and staff training, as well as cutting-edge design.

"We do believe we're outperforming."

Luxury goods firms are recovering from a long and deep recession, with Italy's Prada posting a jump in first-quarter revenue on Monday 24 May. Swiss group Richemont (CFR.VX) reports annual results on Thursday 27 May.

But analysts fear tax rises and public spending cuts to rein in government debt, particularly in Europe, could hit consumer spending in the months ahead.

Cartwright said Burberry's speed in reacting to the downturn, when it slashed costs, jobs stocks and ranges, as well as a response to the recent pick-up in trading, when it introduced an extra "April Showers" collection, showed it could cope with an uncertain trading environment.

Profit before tax and one-off items rose 23 percent to a record 215 million pounds in the year ended March 31, topping forecasts for 201-208 million in a Reuters poll.

"Excellent results," said Shore Capital's Kate Calvert.

"Burberry is an under-exploited brand and a fantastic long-term growth story with significant opportunity to expand geographically in the U.S. and emerging markets, as well as diversify the brand into new product categories."

At 0908 GMT, Burberry shares were up 4.8 percent at 642 pence, compared with a 2.6 percent rise on the STOXX 600 European personal and household goods index .SXQP. They have outperformed that index by about 6 percent this year.

INVESTING

Burberry said a previously announced restructuring of its Spanish business would lead to a trading loss of about 10 million pounds in 2010-11, while brand investments would reduce profits by 5-10 million and it would also incur around 5 million of start-up losses in countries such as Brazil, Mexico and India.

Cartwright said this meant analysts' consensus profit forecast for 2010-11 should stay at about 240 million pounds.

"(But) the quality of the composition of that is significantly enhanced, because there's a stronger core performance and what that's offset by is investment for the future," she said on a conference call.

Sales rose 7 percent to 1.28 billion pounds, led by strong performances in Hong Kong and South Korea, while fewer markdowns helped gross profit margins to climb 760 basis points, and the group ended the year with 262 million of cash.

When asked whether Burberry might return cash to investors, Cartwright said it wanted to keep a strong balance sheet.

The full-year dividend rose 17 percent to 14 pence a share.

Cartwright said Burberry would launch a new digital platform later this year to replace a number of local websites, and also aimed to step up growth in menswear after spending a couple of years exiting old product licences.

"We're now just about at the stage where menswear can shine in its own right and catch up with ... womenswear," she said.

Menswear accounted for 24 percent of group revenue in 2009-10, compared with 35 percent for womenswear. (Editing by David Cowell and Will Waterman) ($1 = 0.6977 pound)