Burberry's sales slump signals struggle to realise potential
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Business |OPINION
In a seemingly perpetual turnaround, Burberry's latest results, unveiled on Wednesday, illustrate the ongoing struggle for the brand to attract shoppers to its contemporary British luxury wares.
Despite its efforts, Burberry's sales plummeted by 12 percent in the first quarter, accompanied by a sharp decline in share prices over the past year, indicating that the brand's messaging has yet to resonate with the aspirational consumer who once coveted its iconic heritage checks.
While outerwear outperformed ready-to-wear, it suggests Daniel Lee's more niche approach to fashion is yet to materialise in driving product revenue.
Like other luxury peers, Burberry continues to grapple with tepid markets such as China and the U.S. In the fourth quarter, sales in China plummeted by 19 percent, while those in the U.S. declined by 12 percent. Despite hopes for a resurgence in demand in the latter half of 2024, the prevailing macroeconomic conditions and global slowdown are unlikely to change.
In a statement Burberry’s chief executive officer Jonathan Akeroyd said: “While our full-year financial results underperformed our original expectations, we have made good progress refocusing our brand image, evolving our product, and strengthening distribution while delivering operational improvements.”
Strategy to realise potential
“We are using what we have learned over the past year to fine-tune our approach, while adapting to the external environment. We remain confident in our strategy to realize Burberry’s potential.”
The past year has seen Burberry busy refurbishing its stores, which under Daniel Lee have a new look and feel, not to mention a revamped logo above the door. The company said it had upgraded more than 50 percent of its boutiques and that it was making “a big accessories push.” Scarves grew by a double digit, year on year.
While sales of scarves are likely not enough to cover the 34 percent drop in operating profit, Akeroyd said “We are setting ourselves up for future growth.”