Burberry, the luxury fashion brand, has announced a significant boost in profit guidance thanks to strong full-price sales. During its fiscal Q3, the company experienced double-digit growth in full-price sales compared to two years ago, signaling its ongoing recovery from the pandemic. This positive trend is not only indicative of Burberry’s resilience but also reflects the broader recovery within the luxury sector.
Chairman Gerry Murphy credited the growth to a “higher-quality business,” highlighting the success of categories such as outerwear and leather goods in attracting new, younger consumers to the brand. As the company eagerly awaits the arrival of new CEO Jonathan Akeroyd in April, it has also reported an acceleration in full-price Q3 comparable store sales. These sales were up 10% compared to Q2 and an impressive 26% compared to Q3 two years ago.
On a larger scale, comparable store sales remained steady compared to Q2 and dipped only 3% compared to two years ago. This slight decrease was intentional, as Burberry aimed to reduce markdowns and focus on enhancing the quality of its revenues. Consequently, retail revenue for the quarter reached an impressive £723 million.
Burberry’s success extends beyond its financial performance. The brand has achieved its highest level of earned reach to date on Instagram, driven by notable brand activations like its pop-up on Jeju Island, as well as strong momentum on TikTok. These efforts have been instrumental in attracting new and youthful consumers, contributing to the double-digit sales growth previously mentioned. Furthermore, the brand’s digital channels continue to thrive, with sales increasing by “high double-digits” compared to two years ago.
Assuming no significant changes in the external environment, Burberry confidently predicts a 35% growth in adjusted operating profit for the current year at a constant exchange rate, surpassing analyst expectations. The company is also maintaining its medium-term guidance for high-single-digit top-line growth and meaningful margin accretion at constant exchange rates.
The strong performance of Burberry’s full-price comparable store sales was primarily driven by impressive results in the Americas, a significant improvement in the Asia Pacific region as Covid-19 restrictions eased, and positive trends in EMEIA. Even in the absence of tourism, these regions showcased remarkable sales growth. Full-price sales for outerwear surged by 38% compared to two years ago, supported by a major campaign and the introduction of the new elevated check range in its Birch Brown colorway. Likewise, leather goods saw a 29% increase in full-price sales compared to two years ago, thanks to the successful launch of new products in the Lola family as part of its Winter collection.
Burberry’s commitment to enhancing the customer experience is unwavering. The brand has introduced a new store concept, with plans to open around 50 new concept stores by the end of the financial year. This new concept has already transformed the way customers experience the brand and its products, effectively contributing to revenue growth. Additionally, Burberry is placing great emphasis on its digital presence and has experienced growing customer engagement through online purchases. This success can be attributed to the brand’s efforts in improving the online purchase journey and providing greater personalization.
All in all, Burberry’s financial results serve as a testament to its recovery from the pandemic and its ability to attract new consumers. With the impending arrival of its new CEO and continued focus on retail and digital strategies, Burberry is poised for further growth within the luxury fashion sector.
Useful links:
– Burberry Official Website
– Burberry on Instagram
