Burberry CEO Jonathan Akeroyd said will leverage the brand’s “Britishness” and connection with British design, craft and culture to become a true powerhouse in luxury. The company want sales of higher margin accessories including handbags and shoes to account for more than half of the total in the near term.
In a Nutshell: “Burberry has an extraordinary legacy, a unique British heritage and a very strong platform to build on, as shown in our half-year results. Our focus in this next phase is on growth and acceleration,” Akeroyd said on Thursday when the company reported first half results.
Akeroyd joined the fashion house in April and replaced Marco Gobbetti. Before Burberry, he was CEO at Versace. In September, he brought in new designer Daniel Lee, who was at Bottega Veneta to succeed Riccardo Tisci. Relying on Lee’s expertise in leather goods, Akeroyd said the next phase of growth includes plans to broadly double sales of leather goods, shoes and women’s ready-to-wear and grow outerwear to 50 percent in the medium term. He also wants to grow accessories to more than 50 percent of total sales in the long term.
Also on the agenda is a plan to accelerate customer acquisition and strengthen its relationship with customers, as well as drive loyalty and retention rates. Burberry also will convert all its stores to a new concept by the end of Fiscal Year 2026, and boost sales densities by more than 50 percent to 25,000 pounds ($$29,620) per square meter. Akeroyd also has plans to accelerate momentum in core markets and double e-commerce revenue to reach 15 percent of retail sales in the medium term.
The end target is reaching revenues of 4 billion pounds ($4.74 billion) over the medium term, and 5 billion pounds ($5.92 billion) over the long-term. Sales last year were shy of 3 billion ($3.6 billion).
For the second half, the company will launch an outerwear campaign in January, one month before Lee shows his first runway collection for Burberry.
Net Sales: For the six months ended Oct. 1, net sales rose 10.9 percent to 1.35 billion pounds ($1.59 billion) from 1.22 billion pounds ($1.44 billion) a year ago.
Burberry said retail sales rose 12.4 percent to 1.06 billion pounds ($1.26 billion) from 944 million pounds ($1.12 billion). Comparable store sales rose 5 percent, reflecting a comp increase of 1 percent in the first quarter and up 11 percent in the second quarter. The company also said that wholesale sales rose 6 percent in the half to 263 million pounds ($311.6 million) from 249 million pounds ($295.0 million), while licensing revenue rose 6 percent to 21 million pounds ($24.9 million) from 20 million pounds ($23.7 million).
The company said new product launches and seasonal collections during the half performed strongly, with leather goods sales posting comparable sales gains of up 15 percent in the second quarter and up 11 percent in the half. Outerwear comparable sales rose 3 percent in the half.
In general, growth in the half was impacted by Covid-19 lockdowns in Mainland China. By region, comparable store sales in Asia Pacific fell 4 percent for the half, based on a comp decline of 16 percent in the first quarter and up 11 percent in the second quarter. Comps for the EMEIA region (Europe, Middle East, India and Africa) were up 34 percent, based on a 47 percent spike in the first quarter and a 25 percent gain in the second quarter. Comps in the Americas slipped 3 percent for the half, down 4 percent in the first quarter and down 3 percent in the second quarter.
Burberry opened or renovated 22 stores in the half, including Bal Harbour in Miami and Taipei 101. It plans to open or refurbish 65 doors in its new concept this year, in addition to the 47 doors from Fiscal Year 2022.
Earnings: Profit for the half rose 33 percent to 193 million pounds ($), or 48.9 pence ($0.58) a diluted share, from 145 million pounds, or 35.7 pence ($0. 43), a year ago. On an adjusted basis, diluted earnings per share was 44.3 pence ($0.52).
Operating profit for the first half grew 27.1 percent to 263 million pounds ($311.6 million) from 207 million pounds ($245.3 million) a year ago.
CEO’s Take: “I am confident in our ability to deliver our medium-term targets and realise our potential as the modern British luxury brand. I am excited about what we can achieve in pursuit of our long-term ambition to reach 5 billion pounds ($5.92 billion) in revenue,” Akeroyd said.