Burberry upbeat as Q1 shows strong rebound
Burberry has reported “an excellent start” to its financial year with a Q1 trading update on Friday showing it has “attracted new, younger luxury customers to the brand”.
It said it saw “strong growth across our strategic categories, in particular leather goods and outerwear, and exited markdowns in digital and mainline stores”.
Looking at the numbers, retail revenue in the quarter to late June rose to £479 million having been only £257 million a year ago.
Comparable store sales “rebounded strongly”, rising 90% vs a year ago and even up 1% on a two-year comparison (2YoY). And full-price sales accelerated to +26% 2YoY. Both full-price leather and outerwear more than doubled against last year’s Q1 and it saw triple-digit growth in shoes.
Digital full-price sales have also more than doubled 2YoY.
Importantly too, since the end of Q1, it has opened its first flagship carrying its new global design concept on Sloane Street, London. It described this as “a new customer experience in a uniquely British luxury setting” and said three more flagships are to follow over the next year.
Its guidance for the current year remains unchanged except for one plus point and one negative. On the plus side, wholesale “is now expected to increase by approximately 60% YoY in H1 due to a stronger order book”.
And the negative? Currency exchange issues are now expected to be a £114 million headwind on sales and £40 million headwind on adjusted operating profit for FY22 based on 25 June spot rates.
But the firm’s “medium-term guidance for high-single-digit top-line growth and meaningful margin improvement remains firmly on track”.
Looking at the latest quarter in more detail, Burberry said it saw strong traction evident across markets and the Americas saw full-price comparable store sales more than doubling. Mainland China increased more than 55% and Korea more than 90% on a 2YoY basis.
It enjoyed the impressive numbers mentioned earlier despite continued disruptions in several markets which resulted in an average 11% of stores being closed in the period. By the end of June, the situation had improved to only 3% of stores closed, but 35% are still operating on reduced hours and business in Europe and much of Asia “is still heavily impacted by the significant decline of international tourist traffic”.
But it has been very active in recent months, launching its dedicated handbag campaign centred around its new handbag shape, the Olympia. Its Kendall Jenner, FKA twigs and Shygirl campaign “generated an excellent response from both press and consumers, particularly across social media where consumer engagement on our campaign posts grew double-digit compared to our Pocket campaign, and newsfeed posts reach and engagement grew +96% and +58% respectively vs [the] Pocket campaign on Instagram”.
In June it launched its men's SS22 show and collection — 'Universal Passport'. The show “celebrated youthful positivity and the discovery of new and unknown spaces through a presentation in the Millennium Mills at the Royal Victoria Docks in East London. Again, it resonated very well with both press and consumers, recording double-digit growth in consumer reach vs our AW21 men's presentation”.
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