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Burberry China sales recover

Burberry says sales in its core China market have improved in the latest quarter, ending a long run of declines.

And while Hong Kong stores posted yet another like-for-like drop due to weaker footfall, the decline is now in the low single digits.

Globally, Burberry achieved a 4 per cent increase in wholesale and retail sales for the three months to December 31, totalling US$1.19 billion. This was largely underpinned by an “exceptional” 40 per cent increase in same-store sales in its UK home market.  UK media report the boom was down to Chinese tourists taking advantage of the cheaper pound in high street flagship stores in London, where staff estimate some 70 per cent of customers are from China.

Globally, retail revenue rose 22 per cent to £735 million.

The luxury fashion brand singled out Burberry China and Hong Kong sales, reporting Asia-Pacific had returned to growth during the quarter, hitting low single-digit percentages, driven by acceleration in Mainland China and improvement in Hong Kong.

American trade experienced a low single-digit percentage sales decline, similar to sales trends in the first half, although the company reported an increase in American customer spending globally.

“With a record number of views of our festive film and strong demand for new products in our collections, this third quarter improvement reflects early progress from our plans to drive Burberry’s performance for the long term,” said Burberry CEO Christopher Bailey.

Verdict Retail analyst Charlotte Pearce said that although the company’s results have been chequered in recent times, its strong performance is a sign the changes the company is making are working.

“Burberry’s double digit growth in EMEIA is most notable in Q3, with the retailer reporting continued strong trading in the UK, thanks to the weak pound which has encouraged tourism spending.

Meanwhile, the innovation and newness of its products aided strong performances in bags, accessories and apparel, with items such as rucksacks and buckle totes standing out,” she said.

“The brand continues to focus on its presence in the digital space through growing its online business, where mobile has been the driver due to improved payment methods, as well as developing an app, which is currently in its testing phase, in order to build Burberry’s connection with customers.”

Pearce said the Asian results bode well for Burberry’s recovery.

“Historically, sales in Asia Pacific have been a source of strength for the renowned British brand, accounting for 38 per cent of retail and wholesale revenue in 2015/16, so the brand should look to identify new markets within the region which indicate fast growing affluence and urbanisation.”

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