Burberry Hong Kong blights sales

Burberry says its first half sales rose nine per cent – with double digit growth in the US making up for declining sales in Hong Kong.

“Asia Pacific delivered low single-digit percentage comparable sales growth,” the company said in a statement.

Within this, China and Korea grew by a mid single-digit percentage, while Burberry Hong Kong, a high margin market, decelerated further during the period, resulting in a mid single-digit percentage decline in comparable sales in the half.

Hong Kong’s performance was so bad, it dragged the overall Asia market growth (excluding Japan) to a mere four per cent, by far it lowest performing region.

“Digital again outperformed in all regions.”

Burberry’s revenue for the six months to March 31 totalled £1.4 billion. Sales growth was in the double digits for North America and the combined Europe, Middle East, India and Africa region.

Sales by the company’s own retail channels rose by 13 per cent – significantly outperforming total revenue growth.

CEO and creative director Christopher Bailey described the half year performance as “robust” despite the Burberry Hong Kong disappointment.

During the second half, Burberry opened seven mainline stores and closed nine. Openings included a flagship in Rodeo Drive, Los Angeles, a store in the Miami Design District, as well as a second dedicated Beauty store globally, in Seoul, Korea.

Due to the phasing out of the Japan license arrangement, the company’s licensing sales were down by 40 per cent, but sales from directly-operated stores in the nation rose by more than 30 per cent.

During the six months, Burberry opened a flagship in Osaka, its fifth free-standing store in Japan, relocated the store in Omotesando, Tokyo, and opened three concessions, taking the network 13.

Concluded Bailey: “We anticipate external challenges will continue in the current year, but remain confident in our long-term strategy to build the Burberry brand and business globally.”

At the end of March, Burberry had 214 retail stores globally, 213 concessions, 57 outlets and 67 franchised stores.