Burberry, the luxury fashion brand, has revealed its plans for the next stage of growth, according to its interim results. With newly appointed CEO Jonathan Akeroyd and design leader Daniel Lee at the helm, the company aims to capitalize on its brand power while reinforcing its commitment to British heritage. To achieve this, Burberry intends to amplify its brand through marketing and communication efforts, maximize the potential of all product categories, double sales of leather goods, shoes, and women’s ready-to-wear, and increase outerwear revenue by 50% in the medium term. Additionally, Burberry plans to expand its accessories line to represent more than half of its group sales in the long run, accelerate customer acquisition and loyalty, convert all stores to its new concept by the end of fiscal year 2026, and boost e-commerce revenue to approximately 15% of retail sales.
The emphasis on Britishness is particularly noteworthy given that the previous creative chief and CEO were Italian. Strengthening ties with British design, craftsmanship, and culture aligns well with Burberry’s objective of establishing itself as a modern luxury brand of British origin. Moreover, prioritizing the accessories segment makes sense for Burberry, as these products often yield high profit margins.
In terms of its performance in the first half, Burberry reported an 11% increase in revenue, reaching £1.345 billion, with a 5% rise in comparable retail sales. While the Q1 comparable sales figure was +1%, this improved to +11% in Q2, despite the challenging trading conditions experienced by many brands during this period. Within the Asia Pacific region, overall comparable sales declined by 4%, but Q2 witnessed an 11% increase, driven by strong performance in South Korea and Japan. In the Americas, comparable sales fell by 3% in both quarters, though they remain higher than pre-pandemic levels. In EMEIA, comparable sales experienced an impressive 34% surge, supported by growth in tourist spending, particularly in France and Spain.
Burberry also recorded positive results in its wholesale and licensing divisions, both of which experienced growth in revenue. The company’s adjusted operating profit increased by 21% to £238 million, while the adjusted operating profit margin rose to 17.7% from 16.2%. Despite acknowledging the potentially challenging macro environment, including disruptions related to Mainland China’s Covid-19 situation and recession risks in Europe and the Americas, Burberry is maintaining its near-term guidance for FY24. Additionally, the company has set a new medium-term target of achieving £4 billion in sales.
During the first half, Burberry made significant investments in its brand, launching successful campaigns and expanding its Lola handbag range, which drove above-average sales growth in the leather goods category. The introduction of new products and seasonal collections also yielded positive results. Leather goods sales displayed strong momentum, with a 11% increase in comparable sales in H1 and a further 15% rise in Q2. The Lola handbag emerged as Burberry’s best-performing item, and the addition of the Frances shape for AW22 played a role in driving success in this product category. Outerwear comparable sales grew by 3% in H1, although growth was hindered by lockdowns in China. Nevertheless, the brand achieved an 18% growth rate in other regions, with both men’s and women’s outerwear exhibiting strong performance.
Burberry’s ongoing efforts to expand and revamp its stores are progressing as planned, with 22 stores opened or renovated in the first half. The company intends to open or refurbish an additional 65 stores in the new concept within this year, building upon the 47 stores from the previous fiscal year.
Overall, Burberry’s interim results portray a positive outlook for the brand’s next growth phase. With a clearly defined strategy, renewed focus on British heritage, and strong performance across multiple product categories, Burberry is well-positioned to achieve its long-term goal of generating £5 billion in revenue.
Useful links:
1. Burberry Official Website
2. Business of Fashion Article on Burberry’s Growth Strategy
