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Burberry shows that ‘excellent’ first half digital growth – as it adapted to changing shopper behaviour – did not make up for store closures

 

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Image courtesy of Burberry
Image courtesy of Burberry
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Burberry shows that ‘excellent’ digital first half growth did not make up for store closures

Burberry today says it has seen “excellent” digital sales growth as it adapted quickly to the way that shoppers wanted to buy as the Covid-19 pandemic hit during the first half of its financial year. But its shops, dogged by lockdown closures in many markets, saw their like-for-like sales fall by 25% – and group sales and profits fell too.

 

Burberry sales of £878m in the half-year to September 26 were 31% lower than at the same time last year, with like-for-like store sales down by 25%. Pre-tax profits of £73m were down by 62% from £193m a year earlier.

 

Sales improved between quarters, with like-for-like store sales down by 45% in the first quarter, improving to a 6% decline in the second half, as full-price sales improved. That recovery has continued in the second half, with store sales returning to growth in October.

 

The luxury fashion retail brand, ranked Top350 in RXUK Top500 research, said that the first half of the year had been hit by Covid-19. At the start of the year, on March 30, 60% of stores were closed as a result of the coronavirus pandemic. In the current financial year, 10% of its shops are now closed as a result of second European lockdowns.

 

But Burberry said a recovery was underway, with good growth in mainland China, Korea and the US. However, its European, Japanese, Middle East and South Asian markets remain affected by the “significant reduction in tourism”.

 

“With restricted travel and evolving consumption patterns, we have reoriented our business to capture opportunities in rebounding markets, localising plans and shifting resources where needed,” it said in today’s half-year statement. This, it said, had resulted in higher sales in September, compared to June, and with a strong performance in the Americas and in Asia.

 

Marco Gobetti, chief executive of Burberry, said: “Though the momentum we have built was disrupted by Covid-19 at the start of the year, we were quick to adapt, while making further progress against our strategy. While the virus continues to impact sales in EMEIA, Japan and South Asia Pacific, we are encouraged by our overall recovery and the strong response to our brand and product, particularly among new and younger customers. In an environment which remains uncertain, we will continue to deliver exceptional product, localise plans and shift resources, while leveraging the strength of our digital platform to inspire customers.”

 

Digital strategy

Burberry said it had made progress in four key areas, including digital sales which are growing by “high double digits”, the ability of the brand to attract new and younger customers, and a strong response to its products – especially leather goods and in full-price channels.

 

Digital sales grew “significantly” as stores closed temporarily in different areas, and the retailer says it has developed immersive experiences on its website, including a BSurf game that ran alongside a Summer Monogram capsule and online world. The retailer ran digital pop-ups focused on its leather goods, and it took part in Tmall’s SuperBrand Day in March - leading to its highest single-day sales to date on that platform. Its latest runway collection was streamed on Twitch for the first time, and has become its most viewed show ever, with 118m views across all platforms. It worked with Kendall Jenner on a computer-generated self-portrait campaign. As a result of these approaches, new and younger customers have turned to the brand, and it won a “considerably higher share of sales” from this group in the second quarter of the year than in the first half.

 

The retail brand has also focused on using digital to bridge online and offline. In Mainland China it opened its first social retail shop in Shenzhen Bay, in partnership with Tencent. “Since its launch in July, it is outperforming our expectations and attracting new and younger consumers to the brand,” Burberry said in today’s statement.

 

Around the world it has focused on using digital to mitigate the impact of store closures, deploying virtual and at-home appointments and styling events, while linking online shoppers to in-store sales staff.


Brexit

Burberry says it is continuing to put plans in place to mitigate the impact of the UK’s withdrawal from the EU. “Post transition, we will face operational challenges associated with cross border movement of goods and potentially incremental duty costs,” it says. “Our plans cover the short term impact of managing the new customs border and extend to strategic options to reconfigure elements of our supply chain as required, particularly if there is no prospect of a zero tariff Free Trade Agreement.”

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