Burberry says turnaround plan showing early progress despite festive sales dip
Luxury fashion brand Burberry has reported a dip in sales over the festive period as it said it was moving with "urgency" to turn the business around and return to profit.
The fashion house, founded in England in 1856, launched a £40 million cost-cutting programme in November after sinking into a loss.
In an update to shareholders on Friday, Burberry said the turnaround plan was already starting to pay off.
It nevertheless reported revenues of £659 million for the 13 weeks to 28 December, down 7% from the £706 million generated over the same period a year prior.
Store sales grew in America, boosted by locals and its refurbished New York shop, while sales decreased in Europe, the Middle East and Africa driven by both locals and tourists.
Sales dropped by nearly a tenth in Asia, with the key Chinese market having particularly struggled amid a more stagnant market in the luxury sector over recent years.
Burberry said it was steaming ahead with its plan to turn around the business, which was launched in November after reporting a £53 million loss for the first half of its financial year.
It is now expecting its results over the second half of the financial year to "broadly offset" the loss recorded over the first half, "notwithstanding the uncertain macroeconomic environment".
Joshua Schulman, Burberry’s Chief Executive, said: "We are encouraged by the response to our It’s Always Burberry Weather outerwear campaign and Wrapped in Burberry festive campaign.
"These activations resonated with a broad range of luxury customers, leading to an improvement in brand desirability and strength in outerwear and scarves."
He said the company believes the strategy will deliver "sustainable, profitable growth over time", adding: "However, we recognise that it is still very early in our transformation and there remains much to do."
Naomi O'Donnell, Senior Brand Strategy Consultant at Yonder Consulting, said: "Schulman’s approach isn’t just about returning to heritage; it’s also about reimagining how the brand engages with its audience. For the first time, Burberry has clearly articulated its customer segments through five distinct archetypes, giving the brand much-needed clarity and direction in a way that had been lacking in previous years.
"This focus on understanding its customer base could prove pivotal for Burberry’s future. Investors have been cautiously optimistic with Schulman's 'Burberry Forward' strategy so today's update has been highly anticipated.
"With new leadership at the helm and a clearer customer strategy in place, the question remains: will this be the breakthrough Burberry needs to shed the ‘struggling brand’ narrative? Can Schulman’s direction create the alignment and focus needed to reconnect with its audience, or will this simply be another iteration of Burberry’s ongoing reinvention? Only time will tell."
The trading update comes as Chief Creative Officer Daniel Lee is rumoured to exit the British brand and head to Jil Sander, the German luxury brand known for influencing the minimalist style that defined the fashion of the 1990s.