Burberry, like many other fashion companies, faced significant challenges throughout the Covid-19 pandemic. However, the luxury brand has demonstrated resilience and is starting to recover as parts of the world reopen.

Preliminary results for the fiscal year ending on March 27, known as FY21, revealed a 10% decrease in Burberry’s revenue at constant currency (CCY), totaling £2.344 billion. The decline was primarily attributed to store closures and reduced tourism. In the first half of the year, revenue plummeted by 30% as the pandemic took a toll on the company. However, there was an 8% increase in the second half as Burberry made strides to bounce back. Wholesale also experienced a decline of 17% for the year but saw significant recovery in the second half.

Adjusted operating profit fell by 9% to £396 million, while reported operating profit skyrocketed by 176% to £521 million. Attributable profit also experienced a significant increase from £122 million to £376 million.

Despite the hurdles presented by the pandemic, Burberry remained committed to its transformation program. The company successfully achieved its objectives for the initial phase of its strategy, ending FY21 with strong full-price momentum. By prioritizing the reduction of markdowns, Burberry achieved a 7% increase in comparable full-price sales for the year. The fourth quarter showed particularly promising results as the recovery gained momentum. Despite having 16% of its stores closed during this period, the company still witnessed a 32% increase in comparable sales compared to the previous year. However, when compared to the same period two years ago, there was a 5% decline in sales. Notably, full-price sales in Q4 grew by 63% compared to FY20, or 12% compared to two years ago.

The recovery varied across different countries and regions. Mainland China, Korea, and the Americas served as drivers of growth in the quarter, with Asia Pacific and the Americas experiencing a 17% and 15% rise in comp sales respectively compared to the “normal” Q4 from two years ago. However, sales in Europe, the Middle East, India, and Africa (EMEIA) saw a 44% decline.

Burberry’s success can be attributed to various factors. The company received an excellent response to its products, witnessing growth in strategic categories and selling prices. It also saw an increase in brand strength, attracting new and younger customers. Digital platforms played a crucial role during the pandemic, allowing Burberry to connect with customers through innovative selling formats. Additionally, Burberry’s social retail store in Shenzhen Bay proved to be a significant development for the brand.

In terms of brand activity, Burberry focused on reinforcing its luxury positioning through emotive campaigns and activations tailored to each market. Notably, it received an exceptional response from local Chinese consumers during Lunar New Year through a locally produced campaign film. The company did not report any impact on its business from China’s response to its stance on Xinjiang cotton.

Burberry’s new collections have resonated strongly with customers, supporting double-digit growth in full-price sales for both new and repeat customers. The company experienced mid- to high-single-digit growth in leather goods and outerwear for FY21. This success was driven by new shapes, such as the Pocket and Olympia, which garnered significant attention through bag campaigns and pop-up events.

Looking forward, Burberry is well-positioned to enter the next phase of growth and acceleration. The company plans to capitalize on its unique brand equity to deliver sustainable, high-quality growth and enact positive change. Key initiatives include expanding its new store concept, enhancing online sales, and focusing on full-price by significantly reducing markdowns in its Mainline stores by the end of FY22.

Useful Links:
1. Burberry Official Website
2. Reuters Article on Burberry’s Q4 Rebound