Burberry bullish on Asian prospects as China, South Korea recover
Fashion label Burberry is optimistic about a post-Covid-19 recovery as sales began to return to normal in Asia during the June quarter.
While same-store sales were down by 45 per cent across the three months, June’s decline was 20 per cent and the brand reported growth in both Mainland China and South Korea which was ahead of pre Covid-19 levels, “albeit with some benefit from the repatriation of sales given travel restrictions,” the company said in a statement.
Across Asia Pacific, sales were down 10 per cent overall for the quarter, but returned to growth in the month of June.
“We expect it will take time to return to pre-crisis levels with the resumption of overseas travel,” said CEO Marco Gobbetti. “We are encouraged by the improving trends in all regions and the promising exit rate for June. We saw an excellent response to new product launches in recovering economies as well as online.”
He said demand for leather goods was particularly strong in Mainland China and South Korea, bringing new, younger luxury customers to the brand, pushing full-price sales up at double-digit rates.
In April, Burberry launched a campaign in China to promote its leathergoods range, using a series of sustainable pop-up stores and using an augmented reality experience and releasing a limited-edition Pocket bag through fashion blogger Mr Bags’ WeChat account,
“The reaction was exceptional with the limited edition bag selling out within a minute of becoming available and Pocket Bag styles overall selling out within three weeks of the campaign going live,” the company reported.
Broader online sales at full price grew by a double-digit rate and the company is now planning a ‘social-retail store’ with Tencent which will open in Shenzhen this summer. The concept store will allow luxury customers to connect their social and online lives to their physical environments using Tencent technology.
Gobbetti said the company believes it is “crucially important” to invest in the brand during the pandemic.
“We will continue to embed flexibility into our plans to allow for investment into consumer facing activities to drive growth where opportunities present.”
At the end of June, the label had a network of 215 retail stores, 148 concessions, 54 outlets and 45 franchise stores, excluding pop up stores.
‘Wise’ move to focus on Asia
Emily Salter, retail analyst at GlobalData, said Burberry was wise to focus on rebounding economies like China, South Korea and Japan, with the 10-per-cent drop in Asia-Pacific sales significantly less than the 75 per cent in Europe, Middle East and Africa. The latter region, she said, would likely be the most affected in the long term as tourist spending will take a long time to recover, and consumers will be less willing to buy luxury items.
In the Americas, sales fell by 70 per cent and while they improved in June, that trend is unlikely to hold as Covid-19 cases rise rapidly and states pause their reopening plans.
Salter also praised Burberry’s digital proposition which outshone its rival luxury brands.
“The retailer excels at using social media to engage with consumers, boosting loyalty among its young shoppers.
“Though the future of experiential retail remains in doubt due to the impacts of Covid-19, experience is likely to remain important among luxury shoppers, and will help cement brand identity and loyalty.”
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