Strong Menswear Sales help Burberry Return to Profit

Posted on 12 July, 2013 by Kirsten Kennedy

During the global financial crisis, consumers were forced to tighten their belts and cut down on non-essentials. This had a huge impact on luxury brands including Mulberry and Burberry, who tend to perform well in overall UK sales yet saw a huge reduction in profits which caused some industry experts to question the fashion houses’ futures in this country.

Fortunately, Burberry has staged an impressive return to good fortune going by its most recently released figures. The fashion group reported an 18 per cent first quarter sales rise to £339 million, resoundingly outperforming analysts’ forecasts and putting it well on track to meet annual targets.

Excluding the effect of new store openings, commercial property-based sales climbed by 13 per cent, comparing favourably to the 8 per cent rise recorded in the last financial quarter of last year. Yet online growth remains the dominant player in the sales field, thanks in part to the “click and collect” service being pioneered in several flagship stores.

While the poor spring weather may have caused issues for other fashion retailers looking to get a head-start on summer sales, Burberry managed to make the best of the rain by offloading a large number of coats from its winter collection. Large leather bags, one of the staples of the brand, also rebounded in popularity and sold extremely well.

However, menswear proved to be the true champion of the first quarter, with sales growing by 25 per cent across the quarter. With menswear now accounting for almost a quarter of overall brand sales, chief financial officer Carol Fairweather has called the category a “significant growth opportunity” for future tactical planning.

Chief executive of Burberry, Angela Ahrendts, remains cautious about the future but praised the brand’s staff for their performance throughout the first quarter.

She said; “Spring/summer 2013 was a standout season driven by innovative marketing, cohesive monthly fashion groups and an exceptional execution.”

However, she added that first half sales are likely to fall behind last year’s totals despite this impressive performance, given the high costs involved in bringing Burberry’s beauty and fragrance ranges back into stores.

As is the case with many luxury brands, Burberry saw its strongest growth in emerging Asian markets. The brand opened two stores in Shanghai in the last quarter alone and used social networking to broaden its online reach, leading to double-digit underlying sales growth across China.

Burberry will now focus on further infiltrating the Chinese market and appealing to consumers by opening larger, more glamorous stores. Plans are in place to open a further flagship store in the country at some point this year, although specifics have not yet been released.

With Burberry back on top, it certainly seems that international consumer appetite for luxuries has returned with a vengeance. However, with many western brands keen to move into the lucrative Asian market it remains to be seen whether the iconic British brand can hold its own when faced with high levels of competition.




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