Burberry has rebounded strongly from the impact of Covid-19, and delivered a sound endorsement of its three-year transformation program with a strong set of annual results.
While overall sales were down 13.8 per cent to £2.344 billion (US$3.29 billion), full-price comparable sales grew by 7 per cent for the full year, while during the fourth quarter to March, full-price sales grew 63 per cent, driven by growth in Mainland China, South Korea and the US.
Emily Salter, senior retail analyst at GlobalData, credited the improvement to the British brand’s focus on streetwear which attracted younger shoppers and resonated well with consumers. Reduced markdowns boosted the company’s brand equity, she said.
“Its key categories of leather goods and outerwear – products that were significantly hit by the impacts of Covid-19 for most brands – returned to mid- and high-single-digit growth for Burberry, signalling the strong demand for well-targeted luxury fashion.”
Comparable store sales for the fourth quarter surged 32 per cent year-on-year and were down 5 per cent compared with the same quarter in FY19, despite an average 16 per cent of stores being closed due to Covid-related trading restrictions. Broader Asia-Pacific comparable sales surged by 75 per cent in the fourth quarter.
“In the last three years we have transformed our business and built a new Burberry, anchored firmly in luxury,” said CEO Marco Gobbetti in a statement accompanying the results.
“We have revitalised our brand image, renewed our product offer and elevated our customer experience while making further progress on our ambitious social and environmental agenda.”
In a subsequent results call, COO Julie Brown said the company was pleased with its performance in Mainland China despite the impact of the Xinjiang controversy.
In March, Burberry lost a Chinese brand ambassador and its hallmark check design was scrubbed from a popular video game, becoming the first luxury brand assailed by the backlash.
Brown said Burberry continued to have “very good relations” with partner Tencent Holdings, with which it has developed popular digital solutions across the mainland, including a world-first ‘Social Retail Store’ in Shenzhen Bay integrating a WeChat mini app with a flagship physical store.
But she declined to comment further on the China market: “There’s nothing more I can helpfully say on this topic.”
In the year ahead, Burberry said it would “continue to strengthen brand equity by exiting markdowns in mainline stores”.