Burberry, the luxury fashion brand, has recently published its preliminary results for the fiscal year ending on April 1, 2023, and the figures demonstrate continued growth and positive performance. CEO Jonathan Akeroyd has described the company’s financial performance as “strong,” with notable progress made in the core leather goods and outerwear categories. The fourth quarter in particular saw a significant improvement, driven by growth in Mainland China and the introduction of Daniel Lee’s new creative vision. This success can be attributed to Burberry’s reorganization in areas such as supply chain, merchandising, and digital teams.
In terms of revenue, Burberry’s annual revenue for FY23 reached £3.094 billion, which represents a 10% rise despite the inclusion of an extra week in the previous year. When comparing revenue on a 52-week basis and at constant exchange rates, it increased by 5%. The retail channel revenue also showed growth, rising by 10% to £2.5 billion, with comparable store sales increasing by 7%. Wholesale revenue experienced a 6% increase to £543 million (or 1% at constant exchange rates), and licensing revenue grew by an impressive 23% to £50 million.
The fourth quarter concluded the fiscal year on a positive note, with store sales on a comparable basis growing by 16%, including a 13% increase in Mainland China. Group-wide growth, excluding Mainland China, reached 17%, with a significant surge of 27% in Europe, Middle East, India, and Africa (EMEIA) due to the return of tourism. Asia Pacific also observed growth of 19%, while the Americas faced a downturn of 7%. Burberry attributed this decline in the Americas to a change in consumer behavior, as tourists from the region chose to purchase Burberry products in EMEIA instead.
Regarding product categories, outerwear comparable store sales experienced a 7% growth in FY23 and 30% in Q4. Leather goods witnessed a 12% increase in comparable store sales for the year and 15% in Q4. Ready-to-wear, excluding outerwear, grew in line with the overall group average, with double-digit growth seen in women’s clothing and mid-single-digit growth in men’s clothing.
Burberry’s new brand aesthetic and Daniel Lee’s debut campaign and runway show have been well received by consumers. The company’s store conversion program, involving the transformation of a significant number of its full-price stores, has also contributed to its success in the retail sector. Burberry aims to update over 50% of its stores by the end of FY24 and is on track to complete the rollout of its updated store portfolio by FY26.
While Burberry is focused on achieving financial success, it also prioritizes its social and environmental responsibilities. The company continues to make progress in these areas while maintaining a robust cash flow. With new leadership in the form of a CEO and creative chief since November, Burberry has outlined its strategy to reach its long-term revenue target of £5 billion. The addition of Daniel Lee has been influential in driving growth, with his inaugural runway show generating significant media coverage.
Burberry experienced an upturn in its rainwear offering due to the positive response to Lee’s initial campaign and VIP dressing at the runway show. The company particularly saw strong growth in heritage rainwear, with comparable store sales doubling in the final quarter. Leather goods also performed well throughout the year, with the women’s bags category demonstrating particular strength, especially with the Lola and Frances shapes, as well as the launch of the vintage Burberry Check line.
Despite the positive developments happening within the company, Burberry has not raised its existing guidance. However, its current goals are already ambitious. The company expects a “high single-digit revenue compound annual growth rate (CAGR)” from its FY20 base and a 20% adjusted operating profit margin at constant exchange rates for FY24. Burberry is also prepared for the impact of currency headwinds in FY24, estimated to be around £70 million on revenue and £40 million on adjusted operating profit.
Overall, Burberry’s preliminary results for FY23 highlight its strong financial performance, with growth in various product categories and regions. The company remains focused on its long-term goals while addressing its social and environmental responsibilities.
Useful links:
1. Burberry’s official website
2. Reuters article on Burberry’s preliminary results
