During the first quarter, Burberry‘s comparable store sales increased 18% for the 13 weeks ending 1 July, reaching revenues of £589m ($760m).
The core categories of outerwear and leather goods were key drivers of Burberry’s successful performance.
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Mainland China witnessed a strong recovery, recording a 46% increase in store sales, thanks to its rebound from Covid-related lockdowns last year. However, the Americas experienced a decline of 8%, compared with a fall of 7% in the previous quarter.
“We have made good progress in the quarter delivering high teens comparable revenue growth led by the ongoing recovery in Mainland China,” said Burberry’s CEO Jonathan Akeroyd.
Key findings in Burberry Q1 results:
- EMEIA (Europe, Middle East, India, and Africa) grew by 17%, thanks to the return of tourists
- South Asia Pacific revenues climbed 39%
- Japan sales jumped 44%.
- Outerwear sales were up 36% and were led by heritage rainwear
- Leather goods achieved a 13% increase.
Akeroyd remains confident for the future and stated: “We saw continued strength in our core outerwear and leather goods categories and are excited about Daniel’s product arriving in stores in September. While mindful of the uncertain macroeconomic environment, we are confident of achieving our FY24 and medium-term guidance.”
To drive customer engagement, Burberry said it implemented a programme of brand and product activations during the quarter, including the successful launch of its summer capsule collection.
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By GlobalDataThe company has also continued to invest in elevating the customer experience, refurbishing 19 stores, including its flagship in New Bond Street, London. The refurbished store now offers an immersive shopping experience across all categories, with a particular focus on leather goods.
Looking forward, Burberry maintains its revenue will grow at a rate in the high single digits on average each year, and by the end of 2024, the company expects its sales to increase by a low double-digit.
However, Burberry anticipates a currency headwind of £150m to revenue and around £70m to adjusted operating profit based on exchange rates effective from 29 June 2023.
What do the analysts say?
GlobalData apparel analyst Alice Price tells Just Style:
“Overall Burberry delivered a strong set of results in Q1 FY2023/2024, experiencing strong growth in the majority of its markets, particularly in mainland China where revenue grew 46% on the year. However, this growth in mainland China is distorted by last year’s comparatives, which saw sales in the region down 35% in Q1 FY2022/2O23, with this showing that Chinese consumers’ appetite for luxury fashion is beginning to recover.
“Burberry’s luxury price points and affluent customer base have not left it immune to macro-economic challenges in the Americas where sales are down 8%, as consumers in North America remain up against inflationary pressures that has ultimately inhibited discretionary spend.
“To continue driving growth in FY2023/2024, Burberry has begun turning its attention to the lucrative Gen-Z demographic, who remain increasingly fixated with luxury fashion, by growing its TikTok platform which currently boasts 3.5 million followers. However, this pales in comparison to the likes of Louis Vuitton, with a following of 11.1 million.”
Wealth Club’s manager of the quality shares portfolio Charlie Huggins added:
“This is a good start to the year for Burberry with strong sales growth, helped by an excellent recovery in China following last year’s Covid-related lockdowns.
“Encouragingly, it isn’t just China driving the growth, with strength in South Asia Pacific, EMEIA and Japan also contributing. This suggests Burberry has seen a good early response to brand elevation efforts and new designs.
“The Americas however remained weak, with sales down 8% suggesting Burberry has more to do in this region to catch up with European rivals.
“Looking to the medium to longer term, Burberry’s success will hinge on the success of new chief executive, Jonathan Akeroyd’s strategy to turn around the struggling luxury fashion house. This will take some time to judge, but the early signs are encouraging.”
