Burberry touts solid US sales as ‘back to basics’ strategy delivers early results

The news: Burberry’s “back to basics” turnaround plan is delivering early results. The British luxury label reported a smaller-than-expected drop during the holiday quarter, fueled by recovery in the Americas.

• Global comparable store sales fell 4% YoY, outpacing the consensus estimate for a 12% decline.
• Buoyant performance in the Americas, where comparable sales rose 4%, helped offset a 9% decline in the Asia Pacific region and a 2% drop in EMEIA.

Returning to its roots: Burberry’s decision to reverse course on its brand elevation strategy and focus on its best-known products—trench coats and scarves—allowed it to gain traction with luxury shoppers in the last three months of the year.

• A series of campaigns that highlighted its outerwear and festive offerings while touting its British roots helped restore Burberry’s desirability and brand heat, particularly in the US.
• The company was particularly encouraged by its performance in the New York area, thanks to the reopening of its flagship store—complete with a “Scarf Bar”—as well as associated local marketing efforts.

Sizable holiday discounts also helped. Some items were on sale by as much as 50% off as Burberry attempted to work through old inventory, although markdowns had less than a two percentage point impact on quarterly sales, CFO Kate Ferry said during a media briefing.

At the same time, shoppers were willing to pay full price for items like scarves, which sold particularly well during the quarter.

The big picture: While Burberry’s turnaround is far from complete, its positive US momentum is an encouraging sign for a luxury industry struggling to navigate a global slowdown in demand, especially following similarly upbeat results from Richemont and Brunello Cucinelli.

Go further: Read our latest report on luxury ecommerce.

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