UK luxury fashion house Burberry saw its Hong Kong and Macau sales slump by about 20 per cent in the latest quarter.
With the two territories traditionally underpinning the group’s global performance, Burberry’s total retail sales rose just 1 per cent in the three months to December 31, compared with 15 per cent in the same period a year earlier.
With Hong Kong and Macau sales removed from its broader Asia performance, sales rose “in the mid single digits” according to the retailer’s statement.
Burberry is over exposed in the Hong Kong market, which is suffering from a huge drop in the number of cashed-up Mainland Chinese tourists visiting the territory, in part due to the widening exchange rate gap between the Hong Kong dollar and the renminbi.
On a same store basis, Burberry’s sales were flat, which marked an improvement on the 4 per cent decline in the preceding quarter, but was short of the company’s projections.
But on a positive note, CEO Christopher Bailey said sales growth had returned in the key Mainland China and Korea markets.
“While Burberry was impacted by the ongoing challenges facing the luxury sector, headwinds in Hong Kong and Macau masked an otherwise stronger performance in many markets,” he said.
Japan achieved comparable sales growth of around 50 per cent.
Anusha Couttigane, senior consultant with Conlumino, said amid its struggles, digital growth has remained one of Burberry’s chief successes, where investment in m.com, its fastest-growing channel, means mobile represents the majority of traffic to burberry.com.
“This is no doubt a reflection of the sustained efforts the brand has made to engage with consumers via social media while they’re out and about, be it shopping on Regent St, where Burberry wrapped the world famous Curve screen in Piccadilly with a 3D scarf, or chatting on WeChat, one of China’s leading IM services, which sees Burberry promoting personalised gift experiences to celebrate the Lunar New Year.
“Yet for all Burberry’s investment in experiential retailing, its Q3 performance has enjoyed little Christmas cheer. These results will no doubt increase the pressure on newly-appointed CEO Christopher Bailey,” Couttigane concluded.
