Burberry Continues To Rise Steadily Without Closing Shop Plans

Under a series of innovative measures, Burberry's first half financial year performance continues to steadily rise in the face of challenges in the global retail environment.
According to the fashion business express data, the sales of British luxury brand Burberry increased by 5% to 1 billion 281 million pounds in the 6 months to September 28th, up 3% at fixed exchange rates, and 5% to 203 million pounds in adjusted operating profit. The pre tax profit rose by 14% to 150 million pounds in accordance with the new accounting standards, with the exception of the impact of the new measures and the increase in profits was 11%.
Burberry reported in the earnings report that the new series of creative director Riccardo Tisci has recorded strong growth, and that the products it designed accounted for 70% of the retail terminal products as at the end of the reporting period. During the reporting period, Burberry menswear sales rose 12% to 347 million pounds, women's clothing sales increased 8% to 387 million pounds, and children's wear sales rose 10% to 66 million pounds.
It is noteworthy that handbags and other accessories are still the most important source of income for the brand. Even though consumers respond positively to the new handbags designed by Riccardo Tisci, sales have dropped to 2% pounds to 457 million pounds. Analysis shows that handbags are a key link for Burberry to win, but now it seems that it will take time to recover.
Like other luxury brands, Burberry has been hit by the deterioration of the retail environment in Hongkong. According to Julie Brown, chief operating officer and finance officer, sales in Hongkong accounted for 5% of the total sales in the second quarter, compared with 8% in the previous quarter, which lost about 14 million pounds. At present, Burberry is renegotiated with the landlord of Hongkong on the issue of rent, but there is no relevant store plan.
However, even if the double-digit drop of sales in Hongkong, Burberry's revenue in the Asia Pacific market also increased by 6% to 500 million pounds, mainly driven by double-digit growth in sales in mainland China. The brand revenue in the EMEIA market also rose by 6% to 487 million pounds, and sales in the Americas region also increased 2% to 270 million pounds.
Burberry stressed in particular that the strong growth of mainland China's performance is inseparable from the support of WeChat's small program and this year's "printing marketing" activities. After Riccardo Tisci took office, Burberry launched the "B Series" which was only released on the social media platform such as WeChat applet and Instagaram. In September this year, Burberry also broadcast 2020 spring and summer fashions in WeChat, and sold new products within 24 hours, aiming to satisfy consumers' pursuit of a continuous and fresh feeling.
To better understand China's market opportunities, Burberry also announced an exclusive partnership with Tencent on opening up China's social retail market yesterday, creating a physical store and providing technical support from Tencent to serve as a link between consumers' social networking and online life and physical environment, bringing unique experience to luxury consumers. The Burberry social retail store will be landing at the newly developed Shenzhen the Mixc, Shenzhen, China Technology Center, and is expected to open in the first half of next year.
Marco Gobbetti, chief executive of Burberry, said that social media is becoming more and more important in the decision-making process of consumers purchasing luxury goods. Especially in the stage of stimulating consumers' inspiration, retail must keep pace with this step. China, as the world's leading innovation and technology center and the most active social media user, is undoubtedly the first choice for Burberry to practice this concept, and is also the most crucial step in brand transformation strategy.
In June this year, the Burberry "exclusive logo kingdom" limited time boutique opened at the IAPM shopping mall in Shanghai and the IFC store in Shanghai Golden State Center. The new logo printing shop was extended over a series of new products throughout the whole series. On the same day, Burberry also planned a "printing parade" on the streets of Shanghai. They did not end, but became part of the urban landscape, attracting the attention of pedestrians along the road.
In the meantime, the whole body of the bus with TB printing was moved to the street by mobile landmarks. At the same time, Hangzhou Qianjiang new town also staged a large-scale lighting show with TB printing as its theme. The tall building of Qianjiang new town has been projected on the Burberry brand logo and TB printing, which has become a high-profile urban landscape that night.
In fact, it is not only China, but also at the critical time node of the brand revival nowadays, Burberry urgently needs some positive public opinion all over the world.
Following the early launch of a series of clothing made from recycled waste, Burberry has recently worked with the The RealReal, a second-hand luxury trading platform in the US, though it will not directly sell the brand products directly on the platform, but will reward users who sell or purchase second-hand Burberry products on the platform.
Burberry Pam Batty, vice president of corporate responsibility, said the resale market does not pose a threat to the brand itself. Jefferies analysts also believe that the potential of luxury resale markets is huge, and smart brands are embracing this, or at least trying to figure out how to participate.
In order to further promote the sustainable development strategy and achieve the goal of carbon neutralization as soon as possible, Burberry set up a diversified and inclusive executive position in July this year, and provided relevant training for employees. It also plans to set up an employee Committee and an external advisory committee, focusing on improving the brand's global sense of diversity and the sense of belonging of employees.
In addition, Burberry will increase its input to the creative arts scholarship to support more students from different cultural backgrounds and provide full-time employment for 50 graduates in the next 5 years. The brand also appointed Debra L.Lee as a group non-executive director and a member of the audit and nomination committee to help the group develop its business in a sustainable manner.
GlobalData analyst Chloe Collins concluded earlier that Marco Gobbetti and Ricardo Tisci are undoubtedly experienced veterans in luxury goods, but facing Burberry's outdated luxury brand is still under pressure. The brand may need to be more bold in its reform.
For the 2020 fiscal year, Burberry decided to maintain its expected annual earnings stability and adjusted operating margin. According to the plan previously announced by the brand, it will save a total cost of 120 million pounds. Burberry's share price rose 3.35% to 21.29 pounds on Thursday, which has risen 23% since the beginning of this year and its market value is about 8 billion 700 million pounds.