Burberry provided insight on its enduring effort to move upmarket by doing away with markdowns in a Q3 conference call on Wednesday. The British brand – which reported a 5 percent increase in sales to 723 million pounds ($985 million) for the three-month period ending in December – revealed that while its sales have not not surpassed pre-pandemic levels, momentum is building. The group pointed to a 36 percent increase in full price sales compared to the same quarter last year and a 10 percent rise over the previous quarter, “with all product categories growing by double digits, helped by flagship stores that were attracting a new generation of Burberry customers.”
In a statement on Wednesday, Burberry Chair Gerry Murphy stated that “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.” He noted that the company’s “focus categories outerwear and leather goods performed strongly as we continued to attract new, younger consumers to the brand.” Full price outerwear and leather goods sales grew by 38 percent and 29 percent, respectively, compared to the same quarter in 2020, with the brand benefiting from sales of its “new elevated check range in Birch Brown colorway,” for instance, as well as the introduction of its “crossbody, tote and SLG versions as part of [its] Winter collection.”
Beyond outerwear and leather goods, CFO Julie Brown highlighted sales of footwear, namely, men’s sneakers, particularly among younger consumers in the U.S., which proved to be a strong region in terms of full-price sales, along with Mainland China. (“Burberry does not see any slowdown of demand in China yet, with near-term headwinds caused by regional covid-19 lockdown,” per Bernstein.) Burberry reported that “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.”
On the digital front Burberry’s management noted that full price sales were up by “high double-digits” across its e-commerce channels during Q3, and the brand achieved its “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.” In terms of the metaverse, Burberry said that its partnership with Mythical Games this summer to release a limited NFT collection within the Blankos Block Party game was a success, with the digital tokens selling out within 30 seconds. (The NFTs released in August consisted of 750 tokens representing Sharky B, which were sold for $300, 1,500 Jetpack NFTs that were priced at $100, and $50 Pool Shoes and $25 Arm Band NFTs, which were not limited in terms of supply and were offered up for a two-week period.)
Seemingly foreshadowing more efforts within this realm, Burberry said it views the metaverse as “a great opportunity to connect with the next generation of consumers.”
As for management, Burberry is in between CEOs at the moment, with Marco Gobbetti, who joined in the brand in 2016 and spearheaded its move more upmarket, recently moved to the same role at Ferragamo, which is in need to a significant revamp from a marketing/positioning point of view. His successor Jonathan Akeroyd, who is moving on from the CEO job at Versace, is slated to begin his tenure in April. In a note in June, Bernstein analyst Luca Solca stated that while “Burberry is in a far better position than when Marco took responsibility for it,” the “jury is still out on Burberry’s continuing momentum.”
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