Burberry profits soar, despite sales slump

Burberry Group has reported operating profits up 36 per cent to £173 million for the half year to the end of September, despite sales falling three per cent year-on-year to £1.22 billion.

Retail comparable store sales were up by three per cent, but total wholesale revenue declined 18 per cent, reflecting changes in operation of the beauty business, which transitioned to a licensed business model this time last year.

Chief executive Marco Gobbetti said he was “energised” by the results as the company begins to transform and reposition.

“The initial response from influencers, press, buyers and customers to our new creative vision and Riccardo's [Tisci] debut collection Kingdom has been exceptional,” he stated. “Mindful that we are only in the first phase of our multi-year plan, we continue to manage dynamically through the transition.”

Launched initially through a new social selling plan on Instagram and WeChat, the B Series presented a limited-edition selection of Riccardo Tisci’s first products for Burberry. This sold out rapidly in China, prompted much higher levels of engagement online and attracted double the mix of new and younger customers to the brand than the February launch.

The report stated that Burberry continued to evolve its store network to align with more luxury positioning. The brand closed a net seven stores during the period bringing the total net store closures in the last 12 months to 19 – comprising 11 mainline, two concessions and six outlets.

Store openings included the relocation and expansion of a Dubai flagship and openings in Shin Kong Place, Xian in China.

Growth in Asia Pacific and EMEIA was offset by a decline in the US, “as we take action to improve customer perception in the market”.

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