Burberry’s (BRBY.L) 2021 sales have been above pre-pandemic levels this year thanks to interest from younger customers, and opening of more stores after easing of lockdown restrictions around the world.
However, the company's shares slumped Monday morning amid concern about what happens after current CEO Marco Gobetti steps down at the end of the year.
"We have made an excellent start to the new fiscal year," said Gobetti.
“Full-price sales accelerated as our collections and campaigns attracted new, younger luxury customers to the brand.”
The British fashion brand's retail revenue for the 13 weeks to June 26 rose 86% to £479m ($661m). Store sales rose 90% year-on-year and 1% compared with 2019.
The latter figure “may not seem a high headline number, but it’s impressive when you consider that 11 stores remained closed, 35% of shops were operating on reduced hours and international tourism still hasn’t rebounded,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.
Burberry saw an acceleration of full price purchases in the first quarter, with 26% growth in like for like sales. In the US and mainland China those sales more than doubled and in Korea they shot up by 90%.
“Making a heel turn away from in store markdowns and reducing outlets was a risk, but it’s paying off for the company,” said Streeter.
Gobetti said that the company saw strong growth across strategic categories, particularly leather goods and outerwear.
Burberry has opened its first flagship with its new global design concept in Sloane Street, London, "a new customer experience in a uniquely British luxury setting." It is planning to open three more flagships over the next year
The company has pledged to become climate positive by 2040, “going beyond net zero to set a new industry standard”.
FY22 guidance remains unchanged except wholesale, which is now expected to increase by approximately 60% year-on-year in the first half of 2021 due to a stronger order book.
Burberry also talked up its social media campaign for its new handbag shape: the Olympia. It featured model Kendall Jenner and musician FKA twigs and Shygirl.
"The campaign generated an excellent response from both press and consumers," Burberry said.
“Burberry’s ultra-savvy marketing drives are helping the company win new style hungry customers across the world, desperate to get their hands on a slice of the brand and willing to pay full price for the privilege,” said Streeter.
Despite some strong figures, the company’s shares were down 2.8% on Friday morning.
“With new variants still disrupting economies around the world, there is still uncertainty ahead. Europe is still a weak spot for the company, with comparable store sales still sharply lower than two years ago,” said Streeter.
She said “a big obstacle waiting to trip up the company on this catwalk of recovery” is the departure of Gobbetti, who is seen “as the turnaround Czar for Burberry”.
Investors are questioning the company’s ability to keep driving through the strategic turnaround without him in the front row, said Streeter.
“Finding the right replacement to fit his large shoes won’t be an easy task.”
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