Burberry’s in the news at the moment. No, wait, Burberry’s always in the news. Just more so at the moment. Only a couple of days after announcing Christopher Bailey would step down as CEO, the company issued a trading update this morning that the news media is jumping all over.
Newspaper and websites largely jumped on the negatives in the announcement and perhaps that’s not a shock given that Burberry has some major challenges ahead (not least among them a new management structure that replaces Christopher Bailey with an external CEO while appearing to give him as much power as ever).
But what’s more interesting than the basic sales figures is its news around digital. Digital grew strongly in all regions during Q1 (no surprise there) and Burberry’s digital growth is being driven by mobile that now approaches 60% of traffic to its site.
Let’s just step back a minute and look at that figure. This is a luxury brand, part of a sector that took virtually a decade to even recognise the existence of the internet. It’s also part of a sector that loves beautifully crafted websites that are seen at their best on large retina screens.
Yet that 60% means Burberry is enjoying the kind of website traffic via mobile that we’d expect to see in the mass-market from brands such as New Look or River Island.
It’s a testament to the investment Burberry has put into digital and a signal to its luxury peers that the ‘M’ in m-commerce can stand for lots of things as well as mobile (Mass, Margins, Momentum, and downright Marvellous, for instance).
Importantly, Burberry has also focused clearly on omnichannel where the stores work with the e-store and the warehouses for a seamless customer experience. The company said this morning that its single pool of inventory model has been further expanded, with about 90 stores now live globally, improving stock availability for all online markets and helping to drive digital/mobile growth further.
Now for the numbers
So, digital aside, what else did we learn this morning? Well, the market is still challenging. Currency-neutral retail revenue was flat in Q1 at £423m, although exchange rates boosted it by 4% in total. But comp sales fell 3%.
There was good news from Asia Pacific as revenues rose and the UK delivered mid single-digit percentage growth, with a rise late in the quarter. But the troubled Hong Kong and Macau markets remain a problem, tourists flows in Japan were down, demand in the US is uneven and mainland Europe is “depressed”, especially France and Italy.
More good news please. OK, fashion apparel and accessories outperformed and the main campaign that launched at the end of May – which was more product focused, featuring the Patchwork bag with new buckle hardware – seemed to be having an effect.
Relative strength in bags was driven by the runway rucksack (as pictured above), while lightweight outerwear performed well, in particular cashmere trench coats and newly-launched menswear styles.
The company also saw an increased number of personal appointments as it boosted its ultra-luxury services and there were more in-store craftsmanship events to enhance customer engagement.
Burberry said the external environment remains challenging and underlying cost inflation pressures persist. Since May, its outlook for wholesale revenue, particularly in the US, is more cautious for both the first and second halves of the year, in fashion and beauty.
The company now expects currency-neutral wholesale revenue to fall more than 10% in the first half to September 30, while retail revenue should be up in the low single-digits.
Thought for the day
But as we digest these figures, we have to remember that Burberry isn’t alone in this. The entire luxury sector is seeing challenges at present and all of those negative listed above can apply just as much to most of the world’s most desirable brands as to Burberry.
What Burberry is almost alone in though is its almost-obsessive focus on digital. And that’s something that can only help it in the tough times ahead.
This post first appeared on Trendwalk.net, a style-meets-business blog by journalist, trends specialist and business analyst, Sandra Halliday