British fashion house Burberry expects to emerge from coronavirus sales slump soon as young Chinese drive sales recovery
- The luxury clothes maker saw double-digit sales growth in China from July to September, helping put it back on track to return to company-wide growth by October
- Other major fashion brands, such as Prada and LVMH, have also relied on continued strong performance in China to offset the impact of Covid-19
The company, famous for its trench coats and check patterns, saw strong double-digit sales growth in China in the period from July to September, helping put it on track for the company-wide sales growth it expects to materialise in October’s numbers. Sales globally fell 6 per cent year-on-year in the period.
“In China we saw very strong growth, due largely to our attraction of a very high percentage of new and young consumers, which suggests the Burberry brand is appealing to a new consumer base,” said Julie Brown, Burberry’s chief operating officer and chief financial officer.
Other luxury clothing firms, including LVMH, Kering, and Prada, also reported double-digit sales growth in China in the second quarter.
Burberry’s performance in the fist half of the fiscal year was bolstered by similarly strong growth in South Korea and the US. Sales in Japan, Hong Kong and South Asia declined.
“We are encouraged by the recovery in [the second quarter] but remain conscious of the uncertain macro-economic environment caused by Covid-19,” Burberry said in an interim results report released on Thursday. Overall revenue fell by 31 per cent annually during the period from April to September, while profits were down by three quarters, said the report.
“The decline in Chinese tourism has affected a number of regions across the world, with about half of our business from the EMEIA (Europe, Middle East, India, and Africa) previously coming from tourism, much from China.”
In 2019, Chinese consumers accounted for 35 per cent of sales in the global luxury market, much of that shopping done while travelling, according to the consultancy Bain & Company.
With that number projected to rise to 50 per cent by 2025, players in the luxury goods industry – like those in many others sectors – are striving to create lasting connections with Chinese consumers.
For Burberry, that strategy includes partnering with China’s most popular e-commerce platforms, most notably Tmall.com, as well as campaigns to offer products tailored specifically for Chinese tastes, known as “localisation.”
In the leather goods category, for example, Burberry has launched 40 new products specifically for the Chinese market in the last six months, said Brown. The campaigns helped leather goods become some of the brand’s most popular products among Chinese consumers, along with rainwear and women’s bags.