Burberry, the renowned British fashion brand, has begun its financial year on a positive note with a robust performance in its Q1 trading update. The company has successfully appealed to a new generation of luxury customers and has witnessed significant growth in key areas, particularly in leather goods and outerwear.
In terms of figures, retail revenue for the quarter ending in late June soared to £479 million, a significant increase from £257 million in the same period last year. Comparable store sales have rebounded strongly, showing a 90% increase compared to a year ago and even 1% higher in a two-year comparison. Moreover, full-price sales have experienced accelerated growth, with a rate of 26% over the two-year period. Particularly noteworthy is the remarkable growth in full-price leather goods and outerwear sales, which have more than doubled compared to Q1 of last year, and the company has also witnessed triple-digit growth in its shoe category.
Burberry’s digital full-price sales have also seen substantial growth, more than doubling in a two-year comparison. Additionally, the company has recently unveiled its first flagship store with an innovative global design concept on Sloane Street in London. This flagship store aims to offer customers a distinctive British luxury experience, and three more flagships are set to be opened within the next year.
While Burberry’s guidance for the current year remains unchanged, there are two notable factors to consider. On the positive side, the company expects wholesale to increase by approximately 60% year on year in the first half of the year due to a stronger order book. However, they anticipate negative impacts on sales of £114 million and adjusted operating profit of £40 million for FY22 due to currency exchange issues based on spot rates in late June. Despite these challenges, Burberry remains confident in achieving its medium-term objective of high-single-digit top-line growth and substantial margin improvement.
Digging deeper into the Q1 performance, Burberry highlights strong traction in various markets. Full-price comparable store sales have more than doubled in the Americas, increased by over 55% in mainland China, and grown by over 90% in Korea in a two-year comparison. These impressive results were achieved despite ongoing disruptions in several markets, with an average of 11% of stores closed during the period. By the end of June, there was improvement, with only 3% of stores closed, although 35% are still operating on reduced hours. Europe and certain parts of Asia continue to be heavily affected by the decline in international tourist traffic.
Burberry has been actively engaging consumers through various campaigns and launches in recent months. Their dedicated handbag campaign featuring the new handbag shape, the Olympia, received an excellent response from both the press and consumers. Consumer engagement on campaign posts grew at a double-digit rate on social media platforms compared to their previous Pocket campaign. Furthermore, the company’s men’s SS22 show and collection titled ‘Universal Passport’ resonated well with consumers and the press, experiencing double-digit growth in consumer reach compared to their AW21 men’s presentation.
Despite the challenges posed by the ongoing pandemic and its impact on international tourism, Burberry remains optimistic about its future. The brand’s ability to attract and retain new younger luxury customers, along with its strong performance in key categories, demonstrates its resilience and adaptability in a rapidly evolving industry. As the world gradually recovers and travel restrictions ease, Burberry is well-positioned to leverage the rebound in consumer demand and continue on its growth trajectory.
Useful links:
1. Burberry Official Website
2. Vogue Business Article on Burberry’s Sales Recovery
