Trumpeting solid growth in China sales in the first half year, Burberry has revealed plans to head more upmarket and cull its store network.
Burberry marketing, retailing and communication will be refocused to meet the changing demands of today’s luxury customers, explained CEO Marco Gobbetti.
The British-headquartered company, which achieves about 90 per cent of its own-retail sales in Asia-Pacific, reported China sales growth in the mid-teen percentages, with a “broadly consistent performance across both quarters”.
“Hong Kong continued to improve, returning to growth in the second quarter,” the company announced, further evidence that the city’s retail sales decline is finally over.
But the region’s overall growth was a more muted “mid-single digit”, largely due to a continuing decline in South Korea, thanks to falling Chinese tourist numbers.
“I am pleased with our performance in the half with strong double-digit underlying profit growth,” said Gobbetti. “Consumers responded positively to fashion and newness, particularly in rainwear and leather goods. Digital revenue grew in all regions, led by mobile, while growth was strongest in our own stores in Asia Pacific.”
Global sales for the six months to September rose 4 per cent to £1.263 billion with adjusted operating profit up 14.6 per cent to £185 million.
New direction
But the solid performance was overshadowed by Gobbetti’s announcement on the brand’s future. He prefaced it by saying the luxury market has changed and today’s luxury consumer demands innovation, curation and excitement from brands and creativity at every turn.
“To win with this consumer, we must sharpen our brand positioning. This will require us to change our approach to product, communication and customer experience.
“We will reshape our offer, increasing and invigorating the fashion content. We will create compelling luxury leather goods and accessories to attract new customers. We will build on the strength of our apparel and re-energise it. We will build our offer to provide a complete look for our customers, while continuing to simplify our ranges.”
He said Burberry will put product “at the centre of our communication”.
“We will leverage our extensive digital reach to convey new energy. We will be bold in the way we engage luxury consumers, reinventing our editorial content and experiences.”
One of the first steps will be rationalising the brand’s non-luxury wholesale and retail doors, with an initial emphasis on the US and EMEIA.
The company has earmarked about £200 million to “transform our in-store experience” by refurbishing stores and enhancing its luxury service.
“We will continue to lead innovation in digital, delivering personalised experiences and true omnichannel services. Our actions will be underpinned by continued focus on productivity, simplification and financial discipline. We will engage and motivate our teams, reinforcing our culture and values. We will continue to be an industry leader in responsibility,” said Gobbetti.
Late last month, Burberry announced the departure of its president and chief creative officer Christopher Bailey after 17 years with the brand. His phased exit will commence in March, before he designs the Spring/Summer 2018 collection before leaving the company in December next year.
