In its Q3 trading update, Burberry has reported strong sales growth, despite facing challenges in Hong Kong. The company’s growth strategy and introduction of new products have played a significant role in driving consumer perceptions of the brand. In the 13-week period ending in December, Burberry’s retail revenue increased by 1% to £719 million. Additionally, comparable store sales rose by 3%, surpassing the 1% increase in the previous year.

The growth can be attributed to an increase in full-price sales, although the impact of limited markdown inventory availability and ongoing disruption in Hong Kong did have a partial offset. Sales in Hong Kong plummeted by 50%, significantly impacting luxury revenues in the region. However, sales in the Asia Pacific region experienced mid-teens growth, fueled by strong sales in Mainland China. EMEIA also witnessed growth, particularly in Continental Europe, thanks to tourist spending. The Americas region remained stable, with the US seeing low-single-digit growth.

Burberry’s focus on apparel and offering a wider range of leather goods for accessories has also contributed to its strong performance. Looking ahead, the company anticipates a low-single-digit percentage increase in full fiscal year revenue at constant currency, up from their initial forecast of stable growth. Despite the challenges in Hong Kong, Burberry expects the adjusted operating margin to remain largely stable.

As part of its ongoing transformation plan, Burberry aims to enhance its product offering, revitalize its brand, and align distribution with its new luxury positioning. The company has made progress in these areas by increasing the availability of new products and evolving its retail and wholesale networks. Consumers have responded positively to Riccardo Tisci’s new collections, with double-digit growth compared to the previous year.

Burberry’s festive campaign was also a tremendous success, achieving record views across major social media platforms. The company’s digital pop-up experience, online game, and Lunar New Year campaign have also been well-received by consumers. Burberry remains confident in its future endeavors in China, including its upcoming AW20 runway show in Shanghai and the opening of its social retail store in Shenzhen, in partnership with Tencent.

In terms of store operations, Burberry continues to renovate existing locations and open new stores. It recently unveiled a flagship store in Tokyo and has incorporated its new creative vision into approximately 60 stores. Additionally, as part of its rationalization strategy, Burberry has closed 16 smaller, non-strategic stores. In the wholesale sector, the company is on track to complete closures in the US by the end of the year, with a focus on non-luxury doors.

Useful links:
1. Burberry Official Website
2. Burberry’s Strategy in China – Vogue Business