Burberry Group’s comparable full-price sales improved 26 percent in the third quarter versus 2019.
In a Nutshell: British luxury brand credited strength in the Americas and a material improvement in Asia Pacific and in the EMEIA (Europe, Middle East, India and Africa) regions for its third-quarter growth.
“Full-price sales continued to grow at a double-digit percentage compared with two years ago, accelerating from the previous quarter and reflecting a higher quality business,” Burberry chairman Gerry Murphy said. “Our focus categories outerwear and leather goods performed strongly as we continued to attract new, younger consumers to the brand.”
Gen Z and millennial customers are driving double-digit full-price sales growth across all product categories. Burberry said it made progress in focus categories including outerwear and leather goods. Full-price outerwear sales rose 38 percent over 2019, thanks in part to its first dedicated outerwear campaign focused on freedom and exploration. The campaign achieved record reviews and launched activations across physical and digital channels, Burberry said. In leather goods, sales were up 29 percent from 2019 figures as the brand extended its Lola line with new styles.
“As we enter our final quarter of Fiscal Year 22, we are excited about the recent launch of our Lunar New Year campaign celebrating the year of the Tiger with a bespoke product capsule and dedicated fashion campaign,” Burberry said.
Third-quarter digital sales improved by the high double-digits versus 2019. An immersive traveling trench experience on display at the Trench Room in its Shenzhen social retail store has garnered strong engagement, traffic and sales, Burberry said. Online sales rose in tandem with enhancements providing greater personalization and omnichannel features allowing customers to book store appointments.
Burberry said its new store concept has transformed how customers experience the brand and product, 31 stores including its Shanghai flagship now featuring the modern store design.
The brand’s transformation strategies were part of a master plan formulated by former CEO Marco Gobbetti. He left the company to take on the CEO role at Ferragamo to be closer to his family. Former Versace CEO Jonathan Akeroyd will join Burberry as its new CEO on April 1.
Last month, the British firm began testing rentals and resale through My Wardrobe HQ, a U.K.-based luxury platform that has partnered with high-end retailers such as Harrods.
As of Dec. 25, Burberry had 218 global retail stores, 150 concessions, 58 outlets and 29 franchise stores, excluding popups.
Net Sales: Retail revenue for the 13 weeks ended Dec. 25 rose 5 percent to 723 million pounds ($986.5 million) from 688 million pounds ($938.7 million).
While full-price comparable sales rose 26 percent from 2019 levels in the third quarter, the gain was 15 percent when compared to year-ago figures. Comparable store sales growth slipped 3 percent compared with 2019, but were up 7 percent from a year ago.
In an earnings call, Burberry CFO Julie Brown described the full-price sales development “as a key indicator of brand strength.” The company had previously decided to stop marking down products in mainline stores and on burberry.com. This means Burberry no longer holds end-of-season clearance sales, Brown said.
“We remain focused on delivering sustainable high-quality growth,” she told analysts.
Comparable store sales in the Americas rose 8 percent from 2019, while new customers fueled full-price comparable store sales growth of 72 percent from 2019 figures. In Asia Pacific, comparable store sales were flat versus 2019 levels, while full-price comparable store sales grew 22 percent over the same period. In Mainland China, comparable store sales rose 15 percent, with full-price comparable store sales up 37 percent over 2019. South Korea’s comparable store sales climbed 28 percent from 2019 levels, with full-price comparable store sales up 62 percent over 2019. Japan and South Asia Pacific saw quarter-on-quarter improvement as Covid-19 restrictions eased, though limited tourist traffic kept sales soft. The EMEIA region also suffered from the lack of tourism, which accounted for about 40 percent of pre-pandemic revenues. Comparable store sales were down 17 percent from 2019, while full-price comparable store sales fell only 4 percent for the period.
Earnings: Burberry expects current year adjusted operating profit to grow 35 percent from year-ago results on a constant exchange rate basis, assuming no drastic disruptions.
“We’re on track to deliver record profit in this year, including operating margin improvement from the previous year,” Brown said.
Chairman’s Take: “Despite the ongoing challenges of the external environment, we are confident of finishing the year strongly and providing an excellent platform on which to build when our new CEO Jonathan Akeroyd joins in April,” Murphy said.