Italian fashion group Mariella Burani on Tuesday said it expects its annual profits to climb between six and seven per cent this year mainly driven by sales growth in Eastern Europe and Russia.

Group Chief Executive Giovanni Burani said the recent acquisition of German apparel group Rene Lezard, which had a strong presence in Eastern Europe, would help it weather economic uncertainty and fears over the SARS virus.

Mr Burani said first quarter sales were up around seven per cent in company-owned stores mainly and its leather goods unit was performing well.

Earlier this month, the firm posted a 96 per cent year-on-year surge in its 2002 net profit to 11.3 million euros ($12.3m) on previously reported higher sales.

"The Asian virus is a serious problem for the fashion industry. It's going to hurt companies that export a lot to that region. But our forecasts have taken that negative impact into account," Burani said during a presentation in Milan.

"We see huge potential through Rene Lezard and our other brands to build up business in Eastern Europe, where consumers are proving very resilient and are not too influenced by events in Iraq and Asia."