Jan 20, 2021
Reading time
3 minutes
Download the article
Click here to print
Text size
aA+ aA-

Burberry sales fall again due to Covid but full-price and Asia are strong

Jan 20, 2021

Burberry saw another round of retail sales falls in Q3, with Europe and the Americas still being hit hard. But the company was upbeat as China, Korea, leathergoods, outerwear and general full-price sales all looked strong.

Burberry AW21 pre-collection - Burberry

The 13 weeks to December 26 saw a 4% retail revenue drop to £688 million, while comparable sales dropped 9%, wiping out the 3% rise they’d managed a year ago.

CEO Marco Gobbetti said the luxury company “made good progress on strategic priorities. We saw a strong increase in full-price sales as our collections and communication resonated well with new, younger clientele as well as existing customers. Our localised plans and digital capabilities helped drive growth in rebounding markets and we implemented our planned reduction in markdown. While the short-term outlook remains uncertain due to Covid-19, we are well placed to accelerate when the pandemic eases”.

The quarter was undeniably challenging with Covid-related store closures averaging 7%. But full-price sales in leather and outerwear increased in the low-teens on a percentage basis and digital full-price sales growth was over 50% with Mainland China up in triple-digits.

Asia Pacific comparable sales were up 11% with strong growth in Mainland China and Korea, although EMEIA was down 37% due to fewer tourists and enforced temporary store closures. The Americas fell 8% as a mid-teen increase in full-price sales was wiped out by its planned reductions in markdown activities.

The company also expects “continued progress on strategic objectives in Q4” with the “full price, regional, and channel mix changes” set to benefit gross margins, even though “headwinds persist”. With 15% of its stores currently shut and 36% on shorter hours, it says “trading will remain susceptible to regional disruptions” in the current quarter.

Overall, Q3’s figures looked impressive and while focusing on full-price performance does ignore a big chunk of sales generated by discounts, the company said the planned reduction in markdowns significantly distorted the comp sales figures so full-price gives the best picture of where it’s at.

Looked at purely from a full-price perspective, and even with 15% of its store chain closed at the height of Q3 and other stores operating on reduced hours, it achieved a high single-digit sales increase in the quarter. Full-price sales were “particularly strong in rebounding markets — Americas, Mainland China and Korea — where our efforts translated to double-digit growth”.

It ramped up its marketing furring the quarter too with a campaign featuring footballer-turned-child poverty campaigner Marcus Rashford that generated “exceptional” consumer response.

In navigating the pandemic, the company also ramped up digital and said innovations such as digital pop-ups and local activations on its webstore helped drive that 50% growth figure mentioned earlier.

For the future, the company expects only “a modest increase” in border trade compliance costs as well as some incremental duty under the rules of origin linked to Brexit. But it seems to be more concerned by the UK’s changes to the ability of tourists to claim their VAT back on luxury goods bought in Britain. It will have a minimal impact this year due to low tourist flows, but “is expected to have a more significant impact when travel flows resume with sales likely to shift between countries”. In short, it thinks some tourists will go elsewhere rather than shopping in the UK.

Copyright © 2023 FashionNetwork.com All rights reserved.