Burberry Announces US$72m in Profits Despite Luxury Slowdown

Burberry's second-quarter sales and profits exceeded market estimates, despite an ongoing slowdown in luxury spending that has impacted rivals such as LVMH and Kering.

The company reported a 6% uptick in fiscal first-half revenue to £1.1bn (US$1.46bn), and profit of £54m (US$72m), compared with a loss of £18m (US$24m) in the same period last year.

Comparable retail sales rose 4% in the first half and the second quarter, which was the fifth consecutive quarter of growth for Burberry, as it continues its brand turnaround under CEO Joshua Schulman.

The Americas and China lead global growth

All of Burberry’s largest product categories saw growth in the first half, while wholesale revenue was up 17% in the same period.

The Americas region remained a key driver of growth, with sales up 12% in the six months to September, followed by a 7% uptick in China and 3% in Asia-Pacific. In the first six months, sales in EMEIA fell 2%.

Discussing the Burberry Forward turnaround strategy, Schulman says that the brand and business had grown stronger, and that Burberry’s five consecutive quarters of growth demonstrate that the turnaround strategy had been effective.

Commenting on the strategy’s momentum in a statement earlier this year, he said: “I’m proud of the momentum we’re building with our Burberry Forward strategy.

“We experienced double-digit growth in Gen Z customers globally, further strengthening our reach with younger customers across regions. 

“The passion and commitment of our colleagues, customers and business partners give me confidence in the path ahead.”

In the six months, Burberry's core outerwear category reached double-digit growth. Leather goods grew in the first half and accelerated further in the second quarter following campaigns to promote bags, boots, shoes and accessories. 

Announcing the results in a statement, Burberry said: “We will continue to drive performance and deliver sustainable long-term value, and … we remain mindful of the uncertain external environment.”

Domestic shoppers improve regional sales

Joshua says Burberry had spent the last two years returning to its “sweet spot in the luxury market”, which was driven by the turnaround strategy.

He adds that investment in locally relevant marketing, such as products for China’s Valentine’s Day celebrations this spring and for the upcoming lunar new year, was also improving sales.

“It is no secret global tourism is down but the local customer has been spending in their respective regions,” Joshua says. “This is a trend we have been seeing all year long.”

While people were spending less as tourists, Joshua says that local spending was consistent at the brand’s flagship city centre stores.

He adds that predictability of consumer spending isn’t always clear, saying the industry “is a very cyclical business”.

Burberry partners:

EssilorLuxottica: Burberry partners with EssilorLuxottica on a long-term exclusive global licensing agreement to design, manufacture and distribute luxury branded eyewear collections.
CEO: Francesco Milleri | Headquarters: Paris, France

Coty: Burberry collaborates with Coty under a strategic licensing partnership to develop, manufacture and globally distribute luxury fragrances and beauty products.
CEO: Markus Strobel (Interim CEO) | Headquarters: Amsterdam, Netherlands

Tencent: Burberry works with Tencent to pioneer interactive social retail stores in China and integrate digital gaming experiences for younger audiences.
CEO: Pony Ma (Ma Huateng) | Headquarters: Shenzhen, Guangdong, China