The British brand, which is fighting battles on multiple fronts, beat some analysts’ expectations and is looking to a stronger second half.
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Burberry Raincoats, Scarves Flew Off Shelves in Fiscal 2024, but Not the Ready-to-wear
The British brand, which is fighting battles on multiple fronts, beat some analysts’ expectations in fiscal 2024 and is looking forward to a stronger second half.
MAY 15, 2024, 2:50AM
LONDON — Cold winds are
whipping through luxury, so it’s no surprise that
Burberry’s biggest sellers last year were weatherproof classics: scarves, outerwear, and the brand’s signature raincoats.
But those sales were not enough to bolster growth in fiscal 2024.
Burberry reported a 4 percent decline in revenue to 2.97 billion pounds, with adjusted operating profit falling 34 percent to 418 million pounds following a downgrade by the company in January.
At constant exchange, revenue was flat in the 12-month period ended March 30, while adjusted operating profit was down 25 percent as Chinese and American customers in particular held back on spending.
Burberry is also planning some changes on the fashion front, shuffling its shop floor offer to include a better balance of runway and classic silhouettes. It also plans to build in more opening price merchandise, and promote new handbag families such as the Knight and Rocking Horse.
Outerwear grew by a high single digit percentage in the year, led by Heritage rainwear. Scarves grew by a double-digit percentage, and leather goods performed “broadly in line” with the group average, said Burberry.
By contrast, men’s and women’s ready-to-wear underperformed in fiscal 2024. Burberry said sales were “below the group average,” declining by a mid-single digit percentage in the year.
Revenue in all the main product categories – accessories, women’s and men’s – was down in the single digits at reported exchange. At constant rates, accessories fell by 2 percent, while women’s rose 4 percent, and men’s 1 percent.
Backstage at Burberry Fall 2024 Ready-to-Wear Collection at London Fashion Week KASIA BOBULA/WWD
Much like
Sabato De Sarno, his counterpart at Gucci, Burberry’s creative director
Daniel Lee is under pressure to deliver. But whipping up bestsellers when aspirational customers are in the mood to save rather than spend, and with quiet, logo-free luxury still the rage, is no easy endeavor.
Still, the clock is ticking.
On Wednesday, Luca Solca wrote that Burberry’s success
“depends on the product and its creative director to generate the heat needed to elevate the brand. Currently, this appears to be lacking, given the avalanche of promotions, reduced wholesale orders, and material outlet exposure, but perceptions can change.”
Citi’s Thomas Chauvet said
“the jury’s still out” as to whether Lee’s brand aesthetics can lead to stronger commercial success and double-digit growth, “in a polarized demand environment.”
Chauvet believes that negative sentiment might continue to prevail for “turnaround” stories, such as Gucci and Burberry, over the next six to 12 months.
As reported last month, fellow fashion player Kering said it expected operating profit in the first half to
plummet by 40 to 45 percent amid a drop in sales at its star brand Gucci, which is undergoing a revamp under CEO Jean-François Palus, deputy CEO Stefano Cantino, and De Sarno.
The fourth quarter was particularly brutal for Burberry, with comparable store sales in mainland China falling 19 percent. Sales from the overall mainland Chinese consumer group were down 12 percent in the final three months, year-on-year.
“The great thing is we’re now live in terms of the execution, [Daniel’s] product is in our channels, and it’s very easy to get a better read, and to adapt things as we go along.
The offer has been transformed and is evolving quite nicely, and we’re still adapting it and changing it. It’s all quite positive,” he said.
He added that Burberry has recently refreshed “a lot of our core, carryover product, and we’ve seen some good early signs of positive reactions to that, as well as an improved quality.”
Akeroyd said
Burberry has also gained a “stronger share” of accessories sales in the U.S., where the company has recently refurbished 20 stores. Accessories have been selling well in China, too.
In China “there is a good, strong awareness of Burberry, and of Daniel as a talent, especially on accessories,” said Akeroyd.
“Sales of Daniel’s accessories in China have outpaced the sales of accessories in the rest of the world. And we see this growing week on week, which is positive. British heritage continues to be a position of strength there,” he added.
The brand plans to push even harder on accessories, with
a campaign for Lee’s Knight and Rocking Horse bags set to break
in the next two weeks.
In the meantime, the store refurbishment program continues.
Akeroyd said that more than 50 percent of Burberry stores having been updated with the new design concept.
No matter what he will always be one of my favorite menswear designers. I've dozens of his Bottega pieces, all of them are great and are still in my weekly rotations. I'll wait for his Burbs to reach the price they should have been.
