Under the leadership of CEO Jonathan Akeroyd, Burberry has reported a successful year with rising sales and profits, despite challenges faced during the 53-week FY22 period and the impact of the pandemic in China during Q4. The company’s annual revenue increased by 21% to £2.826 billion, with a 23% rise at constant exchange rates. This growth was driven by a 37% leap in the first half of the year and a 7% rise in the second half. Comparative retail store sales rose by 18% year-on-year and 6% against FY20.
Retail full-price comparable sales also saw significant growth, with a 24% increase against FY21 and a 30% increase against FY20. The 24% increase in retail full-price comparable sales was composed of a 49% jump in the first half and a 10% increase in the second half. Adjusted operating profit reached £523 million, a 32% rise compared to the previous year.
Burberry attributes its success to a “material improvement” in the quality of its sales mix. The company’s gross margin remained strong, and adjusted operating profit exceeded guidance. Despite pandemic-related lockdowns in mainland China during March, the company managed to stay in positive territory during the final quarter, with store comparative sales growing by 7% compared to the previous year. Burberry noted “strong brand momentum” and an “excellent response” to its first in-person runway show in two years. Investments in outerwear and leather goods led to a 39% increase and a 28% increase in full-price sales, respectively.
Looking ahead, Burberry maintains its guidance for high single-digit revenue growth and “meaningful margin accretion” at constant exchange rates in the medium term. However, the outlook is dependent on the recovery of consumer spending in mainland China and the ongoing impact of Covid-19. The company is also actively managing the headwind from inflation.
Burberry’s strategy of exiting mainline and digital markdowns contributed to the enhancement of its revenue streams. The Americas led the growth in full-price comparable sales, with sales almost doubling in the US compared to FY20. Sales were also strong in South Korea (+81%) and mainland China (+50%). Despite reduced tourism due to travel restrictions, Burberry saw improving trends in EMEIA. The company managed to improve profitability by increasing its adjusted gross margin by 60 basis points to 70.6% at constant exchange rates, despite pressures from Brexit duties and supply chain inflation.
In terms of marketing and brand activities, Burberry focused on localized campaigns and engaging with customers through luxury experiences. Its Q4 brand activities generated strong reach and engagement globally, with a triple-digit increase in follower growth rate on Instagram compared to the previous year. The company also experienced strong momentum on TikTok, surpassing one million followers in Q4. To enhance the customer experience, Burberry has been transforming its flagship stores into new-concept destinations, with 47 stores currently featuring the new design and plans for an additional 65 stores in FY23. The company also emphasizes its digital presence, integrating offline and online channels and expanding its aftercare offer for customers.
Overall, Burberry’s annual sales and profits have shown significant growth despite the challenges faced during the FY22 period. With a focus on enhancing the quality of its sales mix, investing in key categories, and expanding its new-concept flagship stores, Burberry is well-positioned for continued success in the luxury fashion market.
Useful links:
– Burberry Official Website
– Burberry Instagram page
