Burberry – China Takes The Shine Off Third Quarter Results

Burberry, the British luxury fashion house, has released its third quarter results:

  • Like-for-like sales in store increased 1% impacted by COVID-19-related disruption in Mainland China
  • Mainland China sales fell by 23%. Excluding Mainland China, sales grew 11%
  • Near and medium-term targets unchanged – targeting high-single digit revenue growth and rising margins

Charlie Huggins, Head of Equities at Wealth Club, commented:

“Covid-19 related disruptions have impacted Burberry’s performance in China this quarter, with sales falling by 23%. But elsewhere, performance is more encouraging. As pandemic restrictions in China ease, sales should improve.

Looking to the medium to longer term, Burberry’s success will hinge on the success of new chief executive, Jonathan Akeroyd’s strategy to turn around the struggling luxury fashion house.

The group’s performance has been disappointing for many years. Growth and margins have significantly lagged that of European rivals, and operational execution has often left a lot to be desired.

It’s not going to be a quick or easy fix. Elevating a luxury brand like Burberry and creating new products that resonate with consumers takes time, and there are no silver bullets. One thing’s for sure – Burberry’s operational execution will have to improve if it is to close the gap on its European rivals.”

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