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Burberry’s US Sales Fall As Aspirational Demand Weakens

Declines in the US were offset by recovery of Chinese spending, with total comparable store sales for the quarter up 18 percent.
Burberry's new Autumn/Winter campaign features product designed by new creative director Daniel Lee.
Burberry's new Autumn/Winter campaign features product designed by new creative director Daniel Lee. (Burberry)

Burberry’s first-quarter sales were down in the key US market, where demand from aspirational consumers has softened, interim chief financial officer Ian Brimicombe said on Friday. Comparable store sales in the Americas fell 8 percent, the brand reported.

However, total comparable store sales rose 18 percent for the quarter, the fastest rate in two years, buoyed by a recovery in Chinese spending, both at home and in regional tourist destinations, with sales up 46 percent in mainland China and 39 percent in the South Asia Pacific region. The company reiterated its full-year guidance of low double-digit sales growth. Shares were flat in early trading.

“The luxury market seems to be driven by high-end consumers, this is not putting Burberry in the most ideal position to capture the current demand tailwinds,” Bernstein analyst Luca Solca wrote in a note to clients.

Burberry embarked on a creative overhaul at the start of the year under the stewardship of new CEO Jonathan Akeroyd and designer Daniel Lee, the latest effort in a years-long turnaround to push the brand further upmarket and stimulate growth.

In February, the duo rolled out a new brand identity with a refreshed logo and edgy campaign series featuring “heritage” carry-over product, part of a broader strategy to reassert Burberry’s Britishness. The campaign, which spotlighted the brand’s famous trench coats, helped boost outerwear sales by 36 percent during the quarter, Brimicombe said.

On Wednesday, the brand released its first campaign featuring products designed by Lee. Shot by Tyrone Lebon on The Isle of Skye in Scotland and The Giant’s Causeway in Northern Ireland, the ads underscored the brand’s position in outerwear and link to the outdoors.

Burberry’s real test will come in September, when Lee’s debut collection lands on shop floors. A lot is riding on the commercial success of the line: in November, Akeroyd laid out ambitions to double sales of accessories, with higher-priced handbags and new footwear styles expected to drive more than half the brand’s revenues within three to five years.

Lee has also been tasked with boosting the desirability of the brand’s ready-to-wear offering, building out under-penetrated categories like knitwear in a bid to better appeal to the top-tier clients driving growth in the luxury market currently.

A selection of Lee’s new collection has been made available for pre-order in the brand’s newly renovated London Bond Street flagship store, as well as in some stores in Asia.

“It’s got a great reception and pre-orders are coming in,” Brimicombe said, declining to share specific figures. “It’s very positive, the anticipation and the execution is going very well.”

Further Reading

In an interview with BoF the day of his first major speech to investors, Burberry’s new CEO Jonathan Akeroyd outlined his plan for growing the British house into a £5 billion megabrand with designer Daniel Lee.



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