Burberry reported its first quarterly sales increase in nearly two years, with growth returning in China as the British luxury retailer benefits from a "back to basics" strategy, reports London's Financial Times.

The FTSE 100 company, known for its check-patterned coats, said sales at stores open more than a year rose two per cent in the three months to September 27, beating analysts' expectations.

Like-for-like sales in greater China climbed three per cent in the same period, signalling that a slowdown in one of the luxury sector's key markets may be easing.

Burberry shares initially rose in morning trading before slipping 0.6 per cent to GBP12.45 (US$16.40), though they remain up about 27 per cent this year.

Deutsche Bank analysts maintained a "buy" rating on the stock, setting a target price of GBP15.