Burberry bucks Asian trend

Burberry has left its luxury peers with egg on their face, posting double digit first half sales growth in both China and Hong Kong.

Direct retail sales (excluding beauty products) accounted for about 85 per cent of its revenue in the Asia Pacific region, with China and Hong Kong accounting for the majority of sales.

Wholesale growth grew in double digits as well. “This was despite the impact of both the franchise stores in Thailand and the airport store in Hong Kong converting from wholesale to retail,” Burberry said in its trading announcement on Wednesday.

The luxury brand conceded “a more difficult external environment” resulted in some softening of demand across the region, but that did not impact on what is exceptional sales growth for a luxury brand at a time its peers are all reporting decreasing sales as Chinese buy less in the shadow of a gift-giving and graft clampdown and declining consumer sentiment and spending.

During the first half, Burberry closed a net nine stores and concessions, reflecting continued evolution of the store portfolio particularly in China (a net four closures resulting in a total of 74 stores in China) and the opening of a store inside Hong Kong airport.

Beauty sales revenue worldwide increased by 55 per cent underlying, but this performance was against a weak first half last year affected by the transition from licence to direct operation. The first half also benefited from the sell-in ahead of the September launch of My Burberry, the new women’s fragrance.

Globally, Burberry reported a 14 per cent increase in sales to £1.1 billion, with adjusted profit up six per cent underlying to £152 million.

Christopher Bailey, chief creative and CEO said the performance reflected “the passion and commitment of our teams around the world” and the great momentum of the brand.

“Looking ahead, in a more difficult external environment, we continue to focus on the things that we can control. Through authentic products, great customer experiences and a culture of continuous improvement and innovation, we remain confident of Burberry’s sustained out-performance.”

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