The UK-based fashion house, Burberry, has announced third-quarter results, marked by a decline in retail revenue. Suffering the impact of COVID-19 in its retail network, comparable store sales declined by 9% in the quarter.
“Despite the challenging external environment, we made good progress on our strategic priorities in the quarter. We saw a strong increase in full-price sales as our collections and communication resonated well with new, younger clientele as well as existing customers.
Our localised plans and digital capabilities helped drive growth in rebounding markets and we implemented our planned reduction in markdown. While the short-term outlook remains uncertain due to COVID-19, we are well placed to accelerate when the pandemic eases”, commented Marco Gobbetti, Chief Executive Officer.
In the third quarter, retail revenue reached 688 million British pounds, going down by 719 million British pounds in a similar period in 2019.
Comparable store sales declined by 9% in the quarter. The underlying performance was strong with full-price growth in the high single-digit percentage range.
This underlying growth was offset by an increase in COVID-19 related trading restrictions, together with the planned reduction in markdown and reduction in tourist traffic in the outlets, in line with the guidance provided in the company’s interim results.
Space growth from new stores and pop-ups contributed 4% to sales and FX an additional 1% with reported retail sales down 4%. COVID-19 related store closures averaged 7% during the third quarter of the current fiscal year.
Asia Pacific comparable store sales increased by 11% with full-price sales ahead of quarter two FY2021 across the region: Mainland China saw strong double-digit growth (similar to the second quarter) in a quarter that has a higher percentage of local sales compared with H1.
Full-price sales increased at a level well above the Mainland China comp growth and strengthened over the prior quarter, driven by both new and existing customers while markdowns were materially lower; Korea continues to perform well with comparable-store sales up mid-teens.
This included a higher growth in full-price sales, significantly ahead of quarter two; Japan and South Asia Pacific continue to be affected by the limited tourist traffic and COVID-19 related store closures.
EMEIA comparable-store sales fell by 37% and continued to see much lower tourist demand. In addition, the region saw the biggest swing in store closures moving from 5% of stores closed in the second quarter to an average of 19% in quarter three.
The Continental European markets saw a small increase in domestic customer demand. Americas comparable-store sales fell 8% with full-price revenues up mid-teens, offset by the planned material reduction in markdowns. Full-price sales continue to be driven by new and younger clientele.
With currently 15% of stores closed and 36% operating with reduced hours or restrictions and an uncertain trajectory gave the spread of the more transmissible new variants of COVID-19, Burberry expects trading will remain susceptible to regional disruptions.
In terms of full-year trading, gross margins are expected to benefit from positive full-price, regional and channel mix and lower stock provisions. Cost savings are currently running in line with plan and the company believes they are on track to see inventory below last year’s levels.
Network of Stores
On the 26th of December 2020, Burberry had 215 retail stores, 148 concessions, 57 outlets and 44 franchise stores, excluding pop up stores.