Burberry sees multichannel opportunities, despite flat sales and profits

Burberry has reported flat sales for its first half, but says it sees opportunities across its sales channels and markets.

The luxury retailer said it had responded to the slowdown in the luxury market both online and offline by harnessing the power of data. It has fast-tracked best selling products and improved its trademark trench coats, scarves and cashmere, while using analytical tools to deliver a more personalised level of service, and using data to reallocate marketing spend in a more tactical manner.

Burberry pointed to digital highlights including the 11 million views on social media of its Christmas 2015 film within the first 48 hours of it being released, and the expansion of its beauty sales online and in store. But it said the sales environment remained uncertain ahead of Christmas, when it expects to see single-digit percentage sales growth.

Long-term it is also investing in building a new £50 million trench coat manufacturing and weaving factory in Yorkshire in coming years, as well as building its own retail operation in Japan, following the expiry of existing licences, and repositioning its brand in the UK.

Christopher Bailey, chief creative and chief executive officer, said, “We remain focused on building Burberry for long-term, sustainable growth and value creation. In an evolving luxury environment, we see compelling opportunities by channel, region and product, underpinned by the strength of distinctiveness of our authentic British brand.”

The luxury retailer, well known for its trench coats, today reported revenue of £1.1 billion in the six months to September 30, with no change from the same time last year. Retail sales, which account for 70 per cent of revenue, were 2 per cent up on last time. Pre-tax profits before one-off costs also stayed flat, at £152.9 million, up from £152.3 million last time. But at the bottom line, pre-tax profits were £154.7 million compared to £141.8 million at the same last year, when there was a £10.5 million charge related to the ongoing write-down of fragrance and beauty licensing and a hedging strategy in relation to the Chinese market. That hedging underlay a £1.8 million credit charge in the latest half-year, but reflects lower long-term growth forecasts for China.

It said that it had seen improvement in like-for-like sales at the start of the third quarter, compared to the second quarter.

“This robust performance reflects decisive action as the external environment became more challenging in key markets over the period,” said Bailey. “We enter the second half mindful of this backdrop, but confident in our strongest-ever festive plans and emphasis on productivity and efficiency.”

But the results contrast sharply with the same time last year, when Burberry reported a 15 per cent rise in retail revenues, and in the latest full-year, when sales were up by 11 per cent.