Burberry shrugs off Hong Kong woes, delivering solid growth
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 per cent – or £61 million – to £1.281 billion and adjusted-operating profit growth of 15.9 per cent 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 per cent of the range,
“Tisci’s modern and edgy reimagining 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 per cent as Tisci’s new designs incorporate more streetwear elements to capitalise on the athleisure trend. Womenswear performance was also strong, with revenue growing by 7.7 per cent, however sales of accessories were disappointing, dropping 2.5 per cent.
“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.”