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Burberry’s half-year revenues pass £1bn as spending moves further online

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Burberry’s revenues passed £1bn for the first time in the first half of its financial year at a time when spending continued to move online.

The upmarket fashion company said this week that online “outperformed” across its regions, growing significantly while in-store sales remained soft. It said strategies including digital and a focus on customer service, both online and off, had helped to deliver the growth.

Digital innovation also helped drive brand momentum. Those innovations included working with Google to develop Burberry Kisses, and with Apple to use the iPhone 5s to film the Spring/Summer 2014 women’s runway show.

Burbery said giving customers the ability to order in-store via iPads, and to order online and collect in store had enabled “increased conversion and average transaction values.” Its iPad-based Customer 1-2-1 tool is now used in more than 300 stores and enables sales associates to create and see customer profiles in one place, including a visual wardrobe, global transaction history online and offline as well as product and fit preferences.

The six month period also saw digital fulfillment brought in-house in the first half in the US, following a move taken a year ago in the UK. Burberry said it was also looking to improve fulfillment and payment methods “as consumers shift more spending online.”

The company this week reported revenues of £1.03bn in the six months to September 30, 17% up on the same time last year. Pre-tax profits came in at £159m, up 42% from £111.9m, while adjusted pre-tax profits were £174m.

“We remain focused on executing our retail, digital and marketing strategies in the all-important third quarter and in what remains an uncertain macro environment,” said Angela Ahrendts, chief executive.

“The senior team continues to balance brand appropriate revenue growth, selective investment and infrastructure efficiencies to drive sustainable profit growth across the portfolio, especially with the significant long-term potential of our fifth product division, beauty.”

The company said it now had 71 stores in China, which remains a growth opportunity, and that it was investing in flagship markets around the world to service travelling Chinese consumers. That investment includes having Mandarin speakers in all regions and giving sales associates in key markets behavioural and cultural training. The company is also expanding in under-penetrated markets, opening franchise stores in Colombia and Chile.

Our view: It’s interesting to see Burberry note that spending is moving online, and to see its response to changing customer behaviour. Notably, in-store remains a key focus as the public face of Burberry, especially as the retailer moves into new markets.

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