Burberry Group Plc
First Quarter Trading Update
Continued investment in brand and product
“Our performance in the quarter continued to be impacted by lockdowns in Mainland China but I was pleased to see our more localised approach drive recovery in EMEIA, where spending by local clients was above pre-pandemic levels. Our focus categories, leather goods and outerwear continued to perform well outside of Mainland China and our programme of brand activations boosted customer engagement. While the current macro-economic environment creates some near-term uncertainty, we are confident we can build on our platform for growth.”
Jonathan Akeroyd
Chief Executive Officer
| £ million | 2 July 2022 |
26 June 2021 |
% change Reported FX |
CER* |
| Retail revenue | 505 | 479 | +5% | flat |
| Comparable store sales* | +1% | +90% |
*see full statement
We continue to target high-single digit revenue growth* and 20% margins* in the medium term. While the current macro-economic environment creates some near-term uncertainty, our performance in Mainland China has been encouraging since our stores reopened in June and we are actively managing the headwind from inflation. Based on the effective FX rates as of 11th July, we now expect a currency tail wind of c.£190m on revenue and c.£90m adjusted operating profit in FY23.
*at CER
Despite significant disruption from lockdowns in Mainland China, comparable store sales advanced 1% in Q1 FY23. Growth was strongest in EMEIA, where our more localised approach drove an increase in spending by clients in their home markets to above prepandemic levels. This approach, together with increased tourist spend from the Americas has helped to mostly offset lower sales to Asian and especially Chinese tourists. Our focus categories, leather goods and outerwear, continued to perform well outside of Mainland China.
During the quarter, we continued to invest in brand and product, generating a high level of engagement on social media as well as driving traffic to our website and adding almost half a million new profiles to our global customer database.
In April, we expanded our Lola handbag range and supported it with a series of pop-ups and pop-ins as well as a campaign, starring Bella Hadid, Lourdes Leon, Jourdan Dunn and Ella Richards. Alongside this, we introduced a virtual collection on online gaming platform Roblox. Created with one of the Roblox community’s most established digital fashion designers, @Builder_Boy, the exclusive Lola range features experimental designs inspired by our longstanding affinity for the outdoors.
In May, we launched our seasonal TB Summer Monogram collection with a new campaign starring Gisele Bündchen. The collection united two of Burberry’s icons to form a bold print merging the classic Check with the TB Monogram. To support this, we are staging a series of branded takeovers, the first of which is at Loulou Ramatuelle beach club in Saint Tropez for which we have created a bespoke iteration of the collection that is only available at a pop-up store in the resort. We also celebrated the launch of the collection at Neiman Marcus, wrapping the exterior of its store in Atlanta in the TB Monogram and opening a pop-up inside.
Our new product launches and seasonal collections performed strongly. Leather goods comparable sales grew 21% outside of Mainland China, led by the Lola handbag range. The TB family also performed well, supported by the Frances shape from the same family. Outerwear comparable sales advanced 19% outside of Mainland China, driven by rainwear and jackets.
In June, we partnered again with Mythical Games to launch a new NFT collection in their flagship title, Blankos Block Party. Our second NFT collection included a limited-edition Burberry Blanko, a unicorn named Minny B, as well as a selection of Burberry branded ingame accessories which players can add to their virtual portfolio. As part of the collaboration, we created a bespoke social space within the game, a cabana style resort named 'The Oasis', where players can come together to connect, explore and enjoy a unique virtual experience.
More recently, we welcomed the South Korean Premier League footballer Son Heung-min to the Burberry family as our new brand ambassador. This was greeted with a significant amount of social media attention with the post achieving our highest level of engagement on Instagram – some 21% ahead of the previous peak.
At the same time, we continue to elevate the customer experience in stores, rolling out our new design concept to six more locations in the quarter, including two stores in Japan, one in Hong Kong S.A.R., China and three in EMEIA. We remain on track to achieve our target of adding 65 newly designed stores in FY23 to the 47 we rolled out last year.
During the quarter, we also maintained our support for our communities.
We were proud to be an official partner of The Queen’s Jubilee Pageant, celebrating Her Majesty’s extraordinary 70 years of service. As part of this, we shared messages of support at 80 bus stops along the route in London from children at Armley Park Primary School, a beneficiary of our partnership with Marcus Rashford MBE, the National Literacy Trust and Macmillan Children’s Books. To mark the occasion, we designed a limited-edition commemorative scarf. We also sponsored the Superbloom floral tribute at the Tower of London, alongside which we created a large floating meadow that we moored on the River Thames. All plants from the meadow will be replanted by Burberry volunteers within local community projects across the city.
For Pride, we teamed up with media partner Dazed to host a three-day celebration of creativity and community on Whitby Street in London. Alongside workshops, panels and performances by some of the UK’s brightest creative talent, we commissioned a large-scale mural by interdisciplinary artist Jota Mombaça and a poem by performance poet, trans visibility campaigner and model Kai-Isaiah Jamal. We also donated to charities providing resources to the LGBTQ+ community, including longstanding partners Stonewall and the Albert Kennedy Trust.
As part of our commitment to empowering young people, we hosted cultural runways in the UK and US, celebrating the achievements of students who participated in Burberry Inspire. The programme, which is funded by The Burberry Foundation, has provided arts and cultural learning experiences for underrepresented young people since 2018. In May, graduates of our New York programme performed before an audience of teachers, family members and special guests at the Gerald W Lynch Theatre in Manhattan. Our Yorkshire cohort showcased their dance, film and visual arts projects at Leeds Playhouse this week.
We recognise that the long-term success of our business depends on investing in the environmental sustainability of our operations, the resilience of our supply chains and our management of climate change impacts. This month we became the first in our sector to receive SBTi approval for our net-zero target, (to reach net zero emissions by FY 2040), in accordance with the Global Corporate Net Zero Standard launched in Nov 2021.
We have seen strong recovery in Q1 FY23 outside of Mainland China with comparable store sales up 16%. This was offset by a 35% decline in Mainland China due to restrictions and store closures put in place to control COVID-19 outbreaks. Overall, comparable store sales advanced 1% in the period with a significantly different performance in each region.
Space was a 1% headwind in the quarter while FX was a positive contribution of 5%. In total reported retail sales grew 5% YoY at reported rates.
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