21 hours ago | By WGSN Insider
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Apr 15, 2015
If reassurance was needed of the luxury sector’s bright future, look no further than Burberry. The UK-based fashion house Wednesday gave a near-perfect H2 report in what CEO/creative head Christopher Bailey called a “robust” period. The fact is that global omnichannel demand for its “product innovation” including core trench coats and scarves continues to give it its leading edge.
The figures speak for themselves: Total revenue for the six months to March 31 was up 10% on a total – or reported – basis (and up 9% on a comparable – or underlying –basis) to £1.42bn. Retail revenues were up 14% reported (13% underlying) to £1.06bn.
The comps were enviable. Same-store sales rose 9% for the period with double-digit growth in the Americas (up 18% reported/15% underlying) to £378m, and EMEA (up 8% reported/12% underlying to £459m).
Wholesale, excluding beauty, was down an expected 3% underlying to £331m (well we did say near-perfect). Beauty was up 8% underlying, consistent with full year guidance of up about 25%. And licensing rose 3% underlying to £33m.
Although general trading difficulties in Asia-Pacific had an effect, Burberry still reported low-single digit sales growth there (up 7% reported and 4% underlying) to £553m despite “further deceleration in Hong Kong.”
Oh, and digital again outperformed in all regions, it noted.
And it’s not all about the firm’s trench coats either. Burberry may have been a relative latecomer to luxury accessories but the category’s sales rose and impressive 11% (10% underlying) to £506m; Womenswear rose 11% (reported and underlying) to £427m; Menswear lifted 9% (8% underlying) to £310m; Childrenswear rose 2% reported to £41m; and Beauty rose 9% (10% underlying) to £106m, reflecting the success of the blockbuster My Burberry fragrance that was heavily promoted via its Kate Moss-meets-Cara Delevingne ad.
And what of the future? The ever-cautious Burberry also said despite external challenges continuing in the current year, its confidence in its long-term strategy remains as steadfast as ever.
It’s continuing to open new stores and said net new space will contribute low single-digit percentage growth to retail revenue in FY 2016 with 15-20 mainline store openings and a similar number of closures. This includes further evolution of the store portfolio in China.
Wholesale is expected to remain broadly unchanged in the current H1 but beauty should be up in the double-digit percentages. Due to a planned Japanese license expiry, Burberry expects licensing down about 40% in FY 2016.
Burberry is to adjust prices in response to currency fluctuations and rivals’ similar moves, it also said on Wednesday. “We will maintain our price positioning by market relative to our immediate peers … as prices move, we would also move prices up or down in the same way,” Burberry CFO Carol Fairweather said on a conference call after its H2 results were published. Currency movements have created notable price differentials, reaching more than 50% for the same luxury item between European and big Chinese cities, encouraging Asian consumers to buy goods in Europe.
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