Burberry sales and profit up, outlook depends on China recovery

For the 53 weeks ended April 2, 2022, Burberry Group delivered revenue growth of 23 percent at CER to 2,826 million pounds. Comparable store sales grew 18 percent, with underlying performance driven by full-price sales partially offset by the exit of markdowns in mainline and digital stores.

Burberry is maintaining its guidance of high single-digit revenue growth and meaningful margin accretion at CER in the medium-term, which the company said is dependent on the impact of Covid-19 and rate of recovery in consumer spending in Mainland China.

“Burberry is a unique British company with an extraordinary history and heritage and it is a privilege to take the reins in this next phase. The company has made great progress over the last five years to elevate the brand, product and customer experience into the luxury space. I look forward to setting out my plans for building on these strong foundations and accelerating growth at the interim results in November,” said Jonathan Akeroyd, the company’s chief executive officer.

Highlights of Burberry’s full year performance

In the preliminary results statement, the company said, adjusted operating profit grew 38 percent at CER and 32 percent at reported rates to reach 523 million pounds with adjusted operating margin at 19 percent CER and 18.5 percent reported.

Adjusted gross margin increased in the year by 60bps at CER and reported rates. Reported operating profit increased 4 percent, while adjusted pre-tax profit before was 492 million pounds compared to 366 million pounds in FY21.

By region, Asia Pacific comparable store sales grew by 13 percent with full-price up 29 percent. Mainland China comparable store sales grew 37 percent with full-price comparable store sales up 54 percent, South Korea comparable store sales jumped 44 percent with full-price comparable store sales up 81 percent ahead of FY20.

Sales in South Asia Pacific (SAP) declined by a double digit percentage, affected by limited tourist traffic and airport store closures and Japan witnessed a drop in sales impacted by a lack of international travel

EMEIA FY22 comparable store sales fell by 18 percent with full-price down 11 percent. Continental Europe also saw a decline and the UK remained challenged with London performance weak given high tourist exposure. Middle East continued to grow, driven by strong local demand and improved tourist flows.

Americas comparable store sales grew by 28 percent with full-price up 86 percent and full-price sales in the US almost doubled.

Burberry’s full-price sales increase across product categories

During the year, the company invested in categories of outerwear and leather goods. FY22 full-price outerwear sales grew 39 percent and leather goods delivered full-price sales growth of 28 percent.

In FY22, the company opened 38 stores and closed 35 stores. Key openings included three new flagship stores: Sloane Street (London), Rue Saint Honoré (Paris) and Plaza 66 (Shanghai).

During the year, Burberry completed 47 stores in the new design; 39 in Asia including 17 in South Korea and 13 in Mainland China, five in EMEIA and three in Americas. We have 65 stores planned for FY23. The company completed its store rationalisation programme over the past four years with 38 stores closed.

Wholesale revenue increased 35 percent at CER and 29 percent at reported rates driven by strong orders in Americas and recovery in Asia from travel retail. Licensing revenue grew 11 percent at CER and 8 percent at reported exchange rates.