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19 Jan 2022

Burberry Group plc 

Third Quarter Trading Update

Momentum builds 

“Full-price sales continued to grow at a double-digit percentage compared with two years ago, accelerating from the previous quarter and reflecting a higher quality business. Our focus categories outerwear and leather goods performed strongly as we continued to attract new, younger consumers to the brand. Despite the ongoing challenges of the external environment, we are confident of finishing the year strongly and providing an excellent platform on which to build when our new CEO Jonathan Akeroyd joins in April.”
Gerry Murphy, Chair 

 
  • Strong underlying revenue performance in the third quarter, building on the progress made in H1:
    • Acceleration in full-price comparable store sales up 26% vs LLY** (Q2 FY22 +10%), driven by ongoing strength in the Americas and a material improvement in Asia Pacific and EMEIA
    • Comparable store sales down 3% vs LLY (Q2 FY22 flat) on planned exit of markdown
  • Quarter achieved highest level of earned reach to date on Instagram driven by brand activations including pop-up on Jeju Island coupled with strong momentum on TikTok
  • Strengthened our position with new consumers driving double-digit full-price sales growth vs LLY across all product categories
  • Ongoing full-price strength on digital channels with sales up high double-digits vs LLY
  • New store concept transforming how our customers experience our brand and product with 31 stores in the new design including flagship Plaza 66, Shanghai
  • Continued to embed ESG across the business; announced refinancing of Revolving Credit Facility to £300m Sustainability Linked Loan with funding linked to our industry-leading ambition to be Climate Positive by 2040
  • £150m share buyback well advanced and on course for completion before year end

 

Retail revenue 13 weeks ended 25 December

£ million 25 Dec 2021 26 Dec 2020 % change reported FX % change CER
Retail revenue 723 688 5% 8%
Comparable store sales* +7% (-3% vs LLY) -9%    
Full-price comparable store sales** +15% (+26% vs LLY) n/a    

*See full statement **LLY is compared with Q3 FY20

Outlook
Assuming no further changes in the external environment, we expect current year adjusted operating profit to grow in the region of 35% at CER*** compared with the prior year. In addition, the currency headwind is now expected to be £79m (from c.£100m) on revenue and £27m (from c.£40m) on adjusted operating profit. We maintain our medium-term guidance for high single-digit top line growth and meaningful margin accretion at CER****.

*** including the impact of the 53rd  week ****See full statement

Business review
Against an ongoing challenging backdrop, full-price sales accelerated significantly in the third quarter, increasing 26% vs LLY on a comparable basis. Total comparable store sales fell 3% vs LLY impacted by our planned exit of markdown across mainline and digital as we enhanced the quality of our revenues.

We continued to strengthen our position with new, younger consumers, with new customers driving double-digit full-price sales growth across all product categories. Regionally, full-price comparable store sales were driven by continued strong performance in the Americas, a material sequential improvement in Asia Pacific as COVID-19 restrictions eased and improving trends in EMEIA despite an ongoing lack of tourism.

In terms of brand activity, we continued to drive engagement with consumers through distinctive and meaningful storytelling and experiences. In the quarter, we launched our first dedicated outerwear campaign celebrating our iconic outerwear offer with an inspirational brand film unlocking the themes of freedom and exploration, which achieved record views across digital media, and launched activations across physical and digital channels. We engaged with customers through innovative, luxury experiences including large-scale, immersive brand activations at Plaza 66, Shanghai and the biggest of its kind for Burberry in South Korea on Jeju Island. This was amplified globally through 24 pop-ins and 10 pop-ups, as well as throughout key social media including our first branded TikTok sky filter and achieving our highest level of earned reach to date on Instagram.

In product, we made further progress in our focus categories outerwear and leather goods. Full-price outerwear sales grew 38% vs LLY supported by the campaign and new elevated check range in Birch Brown colourway. Leather goods also strengthened over the prior period, with full-price sales up 29% vs LLY as we extended the Lola family with the introduction of the crossbody, tote and SLG versions as part of our Winter collection. As we enter our final quarter of FY22 we are excited about the recent launch of our Lunar New Year campaign celebrating the year of the Tiger with a bespoke product capsule and dedicated fashion campaign.

At the same time, we continue to elevate the customer experience with the roll out of our new store concept. In total, we now have 31 stores in the new design including our second flagship Plaza 66, Shanghai, and we remain on track to deliver around 50 new concept stores by the end of the financial year. The new store concept is transforming how our customers experience our brand and product and is supporting revenue growth.    

Digital innovation remains a key driver of growth for the business with digital full-price sales up high double digits vs LLY. We are seeing strong and increasing engagement with customers globally buying online as an outcome of enhancements we have made to the online purchase journey including greater personalisation. We are also seeing strong adoption by customers of omnichannel solutions, including booking store appointments, which we are expanding across more stores and countries. We created an immersive travelling trench experience inspired by the Trench Room in our social retail store in Shenzhen and brought it to stores across Mainland China where it generated strong engagement, traffic and sales. Building on our partnerships with digital innovators, as part of our outerwear activation on Jeju Island in South Korea, we designed an immersive experience, including Augmented Reality technology that was powered by TikTok and supported strong engagement with our customers.

We continue to embed ESG across our operations and remain on track to complete our 2017-2022 Responsibility goals this year. We announced the refinancing of our Revolving Credit Facility to a £300m Sustainability Linked Loan with funding linked to the achievement of key ESG targets as part of our ambition to become Climate Positive by 2040. This includes accelerating emissions reductions across our extended supply chain (Scope 3) by 46% by 2030 and becoming net-zero by 2040, 10 years ahead of the 1.5°C pathway set out in the Paris Agreement. It also involves investing in nature-based projects with carbon benefits that restore and protect natural ecosystems and enhance the livelihoods of global communities.

We continued our support for young people, extending our partnership with international footballer and youth advocate Marcus Rashford MBE to help disadvantaged children in the UK develop their literacy skills. We also provided funding for new libraries and books in underserved communities in the U.S., Japan and Hong Kong S.A.R., China.

We continue to deliver on our Global D&I Strategy, including launching ‘Demonstrating Allyship’ workshops which will be rolled-out to all colleagues globally over the next 12 months. On World Mental Health Day we also launched a new Global Bereavement Policy, leaders’ guide and colleague support site, which includes paid time off for all colleagues who suffer a bereavement, including pregnancy loss.

We celebrated our first year of working with The Valuable 500 and Business Disability Forum on International Day of Persons with Disabilities. As part of our commitment to building a more inclusive future, we are working to improve accessibility across our stores, manufacturing sites and offices. 

For the full announcement please click here