Two years after Burberry CEO Joshua Schulman rolled out his turnaround strategy for the heritage fashion brand, the luxury retailer has returned to profit. Now, Burberry sees a strong opportunity to drive further growth with Gen Z consumers in China. In an earnings update on November 12, Burberry reported a US$25 million (A$36.7 million) pre-tax profit for the six months to September 26, reversing a US$63 million (A$92.6 million) loss in the same period last year. Revenue rose to US$1.45 billion
illion (A$2.13 billion), a six per cent increase year-over-year, thanks to growth in all major product categories, including womenswear, menswear, childrenswear and accessories, and all regions except for Europe, the Middle East, India and Africa.
“Two years ago, we launched Burberry Forward. Today, our brand and our business are stronger,” Schulman said in a statement about the results. “Five consecutive quarters of growth and improved quality of sales demonstrate that our strategy is working… Having laid the foundations for growth, I am more confident than ever that we will realise the full potential of this extraordinary British luxury brand.”
Burberry benefited from its ongoing efforts to tighten its supply chain and other operational costs. Adjusted operating margin rose to 5.7 per cent, fueled by “better quality” sales with full-price transactions outstripping outlet sales in the half.
However, several retail experts attributed the positive results primarily to the Burberry Forward plan, which has seen the retailer refocus on what it does best – signature British outerwear and the classic checked pattern – and lean into British culture with top-tier celebrity endorsements like actor Pierce Brosnan and singer Olivia Dean.
What experts have to say about Burberry’s comeback
Retail brand strategist and marketing consultant Bethany Paris Ramsay credited Burberry’s comeback to its storytelling and customer marketing.
“Schulman has made it easier to answer a surprisingly basic question: What would I go to Burberry for?” Ramsay told Inside Retail.
Staple pieces, such as the checked trench and scarf, were things that shoppers already associate with the Burberry brand, she explained.
“By putting that recognition to work across the collection, Burberry has given people more ways to buy into a brand they already know. A cashmere scarf can be someone’s first Burberry purchase, while a trench is the piece they might have thought about for years. Double-digit outerwear growth tells me that putting the clothes Burberry is famous for back at the center is paying off commercially,” she added.
To sustain this momentum going forward, Ramsay said that Burberry should keep its assortment anchored in outerwear and build from the way people actually dress.
For example, a lighter trench gives someone a reason to shop Burberry in spring, whereas a great bag can bring that same customer back even if they’re not looking to purchase another coat.
However, she cautioned that the business needs to watch where demand is translating into sales globally, especially with diminished sales in the Middle East, India and Africa.
“Burberry should keep a consistent British identity globally while giving local teams room to decide which products, price points and stories to lead with,” Ramsay said.
Burberry has set its sights on Asia
Burberry’s sales grew by 14 per cent in the US, second to China, where sales rose by 15 per cent.
Burberry has been strategically working on winning over Gen Z consumers in China, creating localised Lunar New Year and Valentine’s Day campaigns and working closely with celebrity ambassadors, such as actress Tang Wei and the veteran actor Chen Kun.
In June, Burberry partnered with Chinese National Geography magazine to launch Expedition with Burberry, a three-part documentary series celebrating the brand’s 170th anniversary and outdoor heritage.
In December, the brand will stage an exhibition in Shanghai called “Ever Forward: The Archive on Stage,” continuing its anniversary celebration.
Schulman discussed his confidence in the market in the earnings update, and noted that Burberry is focused on its long-term potential there.
“You should never underestimate the resilience of the Chinese consumer,” Schulman told analysts during a presentation at Burberry’s Horseferry House headquarters on November 12.
Further reading: Is Burberry back in action after a return to growth?