Burberry boosted by China rebound and surging trench coat sales

Burberry has reported a spike in sales in recent months after a post-Covid rebound in shoppers in China and strong demand for its classic trench coat.

The British luxury house said revenues had jumped by 18% between April and June, compared to the same period last year.

The surge in sales was driven by a 46% increase in mainland China, Burberry’s largest market, as shoppers returned to stores after Covid lockdown measures the previous year.

Ongoing social restrictions in the strategically significant market had previously weighed on the retailer’s sales, but China began significantly easing its zero-Covid policy at the start of this year.

Sales in Japan also jumped by 44% and in South Asia Pacific by 39% over the period. This strong performance in Asia more than offset a decline in the Americas.

Tourists shopping in Europe, the Middle East, India and Africa helped push up revenues in the EMEA region.

Burberry said it had enjoyed strong demand for its heritage raincoats, helping to drive up sales of outerwear by 36% year-on-year, while leather bags also sold well, particularly the vintage check bags and Frances bag.

The Frances bag was a top seller

Burberry backed its full-year guidance, but said it could see a hit of about £70 million to adjusted operating profits based on current exchange rates.

The brand recently reopened its flagship store on New Bond Street in London after closing for refurbishment. It now offers an immersive shopping experience revamped store, including a “luxury” setting and a new VIP area.

The company said the revamped store provided the perfect backdrop for the new collections of creative director Daniel Lee, formerly of Bottega Veneta, who joined Burberry last year replacing Riccardo Tisci. Lee's first collection, which was shown at London Fashion Week in February (main image), arrives in-store in September.

Burberry New Bond Street

CEO Jonathan Akeroyd said: “We have made good progress in the quarter delivering high teens comparable revenue growth led by the ongoing recovery in mainland China.

“We saw continued strength in our core outerwear and leather goods categories and are excited about Daniel’s product arriving in stores in September.

“While mindful of the uncertain macroeconomic environment, we are confident of achieving our full-year 2024 and medium-term guidance.”

Burberry has a medium-term target of £4 billion in revenue.

Charlie Huggins, Manager of the Quality Shares Portfolio at Wealth Club, said of the results: “This is a good start to the year for Burberry with strong sales growth, helped by an excellent recovery in China following last year's COVID-19 related lockdowns.

"Encouragingly, it isn't just China driving the growth, with strength in South Asia Pacific, EMEIA and Japan also contributing. This suggests Burberry has seen a good early response to brand elevation efforts and new designs.

"The Americas however remained weak, with sales down 8% suggesting Burberry has more to do in this region to catch up with European rivals.

"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."