Burberry sales jumped 10% on a reported basis to £3.09 billion in the year ending 1 April 2023 with growth accelerating in the final quarter as China bounced back from Covid restrictions and consumers responded positively to the British luxury house’s new creative vision.
Comparable retail store sales were up 7% year on year while adjusted operating profit was up 8% to £634 million with reported operating profit up 21% to £657 million, resulting in a margin of 21.2%.
In Q4 comparable store sales accelerated to 16% as growth rebounded in Mainland China to +13%. Elsewhere during the quarter, growth outside of Mainland China was +17%, EMEIA +27%, Asia Pacific +19% and the Americas -7%.
The year was one of transition for Burberry as new CEO Jonathan Akeroyd, formerly of Versace, took the reins in Spring 2022 and new creative chief Daniel Lee, formerly of Bottega Veneta, arrived in the autumn. Both Brits, Akeroyd and Lee took over from Marco Gobbetti and Riccardo Tisci respectively, and vowed to re-institute a sense of Britishness to the brand’s aesthetic.
Lee’s first show for Burberry was presented at London Fashion Week in February (pictured above) and had received an “excelllent response”, according to the brand garnering 4,000 pieces of global media coverage with an estimated reach of c.4bn. Prior the show Lee had unveiled his new creative vision with a campaign featuring musician Skepta, model Georgia May Jagger and footballer Son Heung-Min. The show and the campaign boosted sales of its key outwear category, Burberry said.
Elsewhere Burberry reorganised its supply chain, merchandising and digital operations under new leaders to drive its strategy, and recruited Kate Ferry as its new CFO. During the year it refurbished/opened 60 store with around 30% of its full price network now updated.
“I am very pleased with what we have achieved this year. We have delivered a strong financial performance, supported by good progress in our core leather goods and outerwear categories, with revenue accelerating in the fourth quarter as growth rebounded in Mainland China. Having appointed Daniel Lee as our new Chief Creative Officer, we have refocused our brand aesthetic and brought his new creative vision to life with a campaign and runway show that have been very well received.
“At the same time, we have reorganised our supply chain, merchandising and digital teams under new leaders to drive our strategy forward. While the external environment remains uncertain, I am confident we can achieve our FY24 and medium-term targets as we focus on executing our plan to realise Burberry’s potential as the modern British luxury brand,” Akeroyd said.
Responding to the results, Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club, commented:“Burberry’s sales growth accelerated in the fourth quarter, as pandemic restrictions in China eased, leading to a solid set of full year results.
“Looking to the medium to longer term, Burberry’s success will hinge on the success of new chief executive, Jonathan Akeroyd’s strategy to turn around the struggling luxury fashion house. This will take some time to judge, but the early signs are encouraging, with a good response to Burberry’s new brand designs and margins finally moving in the right direction.
“The group’s performance has been disappointing for many years. Growth and margins have significantly lagged that of European rivals, and operational execution has often left a lot to be desired. Given this track record, it is far too early for the new CEO to declare victory and much work still remains to be done. Sales in the Americas for example declined by 7% in the fourth quarter, a much weaker performance than Burberry’s key European rivals.
“It’s not going to be a quick or easy fix. Elevating a luxury brand like Burberry and creating new products that resonate with consumers takes time, and there are no silver bullets. But at least sales and margins are moving in the right direction, providing early encouragement.”