Burberry upbeat despite Q3 sales dip, monthly drops are strong
today Jan 23, 2019
How is Burberry’s evolution going? And how healthy is the luxury sector at present? Well, the UK luxury giant issued a Q3 update on Wednesday morning and the answer to both questions seems to be “OK”. And in this case, OK means the figures weren’t spectacular but they weren’t depressing either.
The company was upbeat even though overall retail revenue dipped and like-for-like sales edged up only a little. It talked of “continued customer excitement ahead of new product delivery” and building “brand heat through [its] Festive campaign, Vivienne Westwood collaboration and B-Series product drops.”
And it said it’s continued to shift consumer perceptions of the brand, “driving increases in digital engagement and endorsement from key influencers.” Meanwhile, wholesale clients have “responded positively to Riccardo [Tisci’s] commercial product lines as the transformation of our distribution network continues.”
Of course, the big test will come when Tisci’s debut runway collection drops in-store next month and he shows on the runway for a second time. But for now, CEO Marco Gobbetti said he's “pleased with our progress in the quarter as we continued to build brand heat around our new creative vision and shift consumer perception of Burberry,” while also confirming the outlook for the full year.
So what actually happened in Q3, the 13 weeks to December 29? Reported retail revenue dropped 1% and on a currency-neutral basis, it was down 2% (although that includes a 1.1% negative impact from calendar effects), while like-for-like sales inched up 1% to £711 million.
That may not look like a stunning set of figures but the company stressed that it’s “still in the first phase” of its multi-year plan to transform and reposition Burberry and it had warned when unveiling the plan that results would be affected.
The company clearly seems pleased with the way things are going - especially as it transitions from the straight see-now, buy-now model it had adopted for a few years under Christopher Bailey to a more nuanced approach under Tisci.
It has used the monthly B-Series to generate a continuous flow of limited-edition products designed by Tisci and keep consumers coming back for more. Sold predominantly through social media, these collections “resonated strongly with new and younger customers and were endorsed by key influencers around the world,” we’re told. And the company added that, in China, the B Series “was recognised as 2018's most exciting luxury campaign on WeChat.”
The collection with Vivienne Westwood also “saw strong global demand and attracted exceptionally high traffic to our digital platform,” it said.
The response to the Christmas campaign starring Kristin Scott Thomas, MIA and Matt Smith was also “strong with associated social conversation reaching around 57 million consumers.”
And more widely, “our social media presence continues to grow with more than one million additional followers [quarter-on-quarter] across Instagram and WeChat and a more than 50% improvement in reach on WeChat,” which is key for the Chinese market.
In fact, China was very important in the quarter with Asia Pacific sales benefitting from Mainland China being up in the mid-single-digits. Meanwhile EMEIA showed only "a small improvement in tourist spending quarter-on-quarter,” while the Americas were “impacted by softer footfall trends.”
The company also “continued to translate our new creative vision into our distribution network,” during the quarter and is accelerating its wholesale remodelling in this half, stepping up its closure programme of non-luxury doors in the US. In retail, its store refresh programme will reimagine 10 key flagships by the end of the financial year.
Wholesale clients (the ones that aren’t being cut) seem to be happy with this and the company said excitement is building ahead of the runway collection being delivered in February with “a strong plan for the launch including activations across key wholesale doors.”
Copyright © 2020 FashionNetwork.com All rights reserved.