Burberry shrugs off Hong Kong woes, delivering solid growth
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British fashion house Burberry has reported sales and profit increases in the first half-year, despite the turmoil in Hong Kong, one of its largest international markets.
“We are pleased with our performance in the half, as we remain on track to deliver the first phase of our strategy,” said Marco Gobbetti, CEO of the Hong Kong-listed fashion company.
“We delivered financial results in line with guidance despite the decline in Hong Kong and we confirm our outlook for the full year.”
During the six months to September 30, Burberry achieved comp-store sales growth of 4 percent – or £61 million – to £1.281 billion and adjusted operating profit growth of 15.9 percent to £202 million.
Gobbetti said customer response to its new products has been positive, delivering strong double-digit growth. “We also continued to strengthen momentum around our brand and transform our distribution.”
Chloe Collins, senior retail analyst at GlobalData, said credit for Burberry’s turnaround is due to new creative director Riccardo Tisci, as his collections now dominate the product assortment, achieving double-digit growth and now accounting for 70 percent of the range,
“Tisci’s modern and edgy re-imagining of Burberry’s classic and traditionally British fashion styles, with a heavy focus on the new monogram logo, have transformed the brand, helping it appeal to a younger audience, who will then carry their desire for the brand with them as they age.”
She said the menswear categories reacted particularly well within the half, with sales lifting by 12.3 percent as Tisci’s new designs incorporate more streetwear elements to capitalize on the athleisure trend. Womenswear performance was also strong, with revenue growing by 7.7 percent, however sales of accessories were disappointing, dropping 2.5 percent.
“With new styles, including the signature TB bag, reportedly receiving positive reactions, Burberry must heavily promote these via social media and give them prominent positioning in stores to maximise Christmas gifting opportunities and achieve stronger results for the third quarter.”
Questions & Answers
Q.How did Burberry's overall sales and profit figures compare to the previous period?
How did Burberry's overall sales and profit figures compare to the previous period?
Burberry reported a 4 percent increase in comparable-store sales, reaching £1.281 billion. Adjusted operating profit also saw significant growth, rising by 15.9 percent to £202 million during the first half-year.
Q.What impact did Riccardo Tisci's designs have on the product range and sales performance?
What impact did Riccardo Tisci's designs have on the product range and sales performance?
Tisci's collections now account for 70 percent of Burberry's product range and are credited with achieving double-digit growth. His modern re-imagining of styles has helped the brand appeal to a younger audience.
Q.Which specific product categories performed well or poorly in the first half?
Which specific product categories performed well or poorly in the first half?
Menswear sales rose by 12.3 percent, benefiting from streetwear elements, and womenswear revenue grew by 7.7 percent. However, sales of accessories were disappointing, dropping by 2.5 percent.
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