Trenchcoats help Burberry shrug off sales slowdown

Luxury fashion label Burberry has enjoyed a “robust” second half, boosted by strong demand in American and European markets, but saw a weaker performance in the Far East.

Burberrys iconic trenchcoats remained popular, boosting sales growth. Picture: Getty Images/Burberry
Burberrys iconic trenchcoats remained popular, boosting sales growth. Picture: Getty Images/Burberry

The group said total revenues for the six months to the end of March were up 9 per cent on an underlying basis, at £1.4 billion.

Comparable sales in stores rose 9 per cent, amid strong demand for the latest versions of its signature trenchcoats and scarves and “exceptional growth” for its range of ponchos.

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Retail sales grew in the double-digits in the Americas, Europe, Middle East, India and Africa, but in the Asia Pacific region growth was in the low single-digits – including “further deceleration” in its high-margin Hong Kong market.

Brewin Dolphin analyst Nicla Di Palma said Burberry could leave the region if trading does not improve, adding: “It is unclear at this stage whether the situation in Hong Kong is temporary, but Burberry does have other levers to pull if it turns out to be permanent.”

Burberry said that digital sales “again outperformed in all regions”. Wholesale revenues were unchanged at £331 million, although beauty products – including its My Burberry perfume – were ahead of last year.

Chief executive Christopher Bailey, who succeeded previous boss Angela Ahrendts in May last year, said: “We are pleased to report a robust second-half performance, despite an uncertain external environment.

“Customers responded strongly to product innovation, especially in our core British-made heritage trenchcoats and scarves, while we continued to invest in digital and retail initiatives, including flagship openings in Los Angeles and Japan.”

Bailey, who also serves as chief creative officer, added: “We anticipate external challenges will continue in the current year, but remain confident in our long-term strategy to build the Burberry brand and business.”

Burberry said new openings would help contribute low ­single-digit retail revenue growth in the current year, but licensing revenues would fall by about 40 per cent due to a planned expiry of a licence in Japan.

The London-based business, founded in 1856, had 214 retail stores, 213 concessions, 57 outlets and 67 franchise stores at the end of the period.

Richard Hunter, head of equities at Hargreaves Lansdown, said Burberry “remains in fashion” despite “blots on the landscape” such as Hong Kong.

He added: “The overall picture is extremely healthy – the strength of the digital contribution, particular product growth in the likes of the iconic trenchcoats and scarves and pleasing performances from the Americas and most of Europe.

“The company is well positioned for future, selective growth in terms of both stores and lines, such as beauty, releasing the potential to add more chapters to its successful story.”

Burberry’s shares, which have risen by about 25 per cent over the past year, ended the day up 45p, or 2.5 per cent, at 1,829p.