U.K. luxury fashion brand Burberry has seen results boosted by Chinese and Asian consumers. (Photo … [+] by Daniel Fung/SOPA Images/LightRocket via Getty Images)LightRocket via Getty Images
U.K. luxury fashion retailer Burberry has upgraded its full-year profit forecast after a promising rebound in sales since December, driven by robust recovery in demand for its luxury goods in China and South Korea.
In announcing a more optimistic forecast, the upscale fashion house – best known for its iconic Burberry trench coat – became the latest luxury fashion retailer to cite Asian retail sales as a boon to global performance over the past couple of weeks.
Italian luxury duo Prada and Salvatore Ferragamo had also pointed to Chinese retail sales and a huge uplift in e-commerce when they shared trading updates.
Burberry said that same store retail sales would be up by nearly a third year-on-year in the first three months of 2021, following its report for the 13 weeks to Dec. 26 that Asia Pacific region sales had jumped 11% on strong demand from Chinese and Korean shoppers. Online sales were up by more than 50% in the company’s third quarter and by more than 100% in mainland China.
“Since December, we have continued to see a strong rebound and now expect revenue and adjusted operating profit to be ahead of consensus expectations,” the company said in an unscheduled update, with the performance upgrade likely to soften the overall decline in full-year revenues to between 10%-11%. Analysts had forecast a fall of about 13%, according to Burberry.
The company has been busy reworking its position during the pandemic, using stars such as Manchester United footballer Marcus Rashford, who helped attract younger customers to Burberry’s designer apparel and accessories, with sales of leather handbags and outerwear up in the “low teens”.
Globally, Burberry experienced a 37% drop in sales in Europe, the Middle East and Africa in the final quarter of 2020, hit by store closures and fewer tourists. With 15% of its stores still closed and about a third operating reduced trading hours or under restrictions, Marco Gobbetti, Burberry’s chief executive, said the British luxury brand faced an “uncertain trajectory”, but said: “While the short-term outlook remains uncertain due to Covid-19, we are well placed to accelerate when the pandemic eases.”Prada And Salvatore Ferragamo Look East
Burberry’s update came after Italian fashion house Prada and the luxury goods group Salvatore Ferragamo also said that strong performance in China had boosted sales during a challenging year.
Actress Jin Chen attends a Prada event in Beijing. China and e-commerce have boosted the Italian … [+] fashion brand’s results. (Photo by VCG/VCG via Getty Images)VCG via Getty Images
Milan-based Prada’s sales and profits rebounded at the end of last year from a first-half slump due to the coronavirus pandemic, helped by a strong performance in China and elsewhere in Asia. The positive trend has carried on into 2021. Prada, famous for its luxury bags and apparel, also benefited from a surge in online sales, which more than tripled in 2020 versus 2019. Last year, Prada launched e-commerce in new key markets and revamped its website.
“We are just at the beginning of our growth trajectory and there is still a huge potential to unlock,” said marketing head Lorenzo Bertelli, son of Prada’s founders and co-CEOs Miuccia Prada and Patrizio Bertelli.
CEO Patrizio Bertelli added during the update: “We have 130 stores that are still closed due to the pandemic and the group’s performance in early 2021 is quite good anyway. That give us confidence to face the upcoming rebound, as soon as the most critical phase of the pandemic will end.”
In the second half of the year domestic customer sales almost fully offset the absence of tourists. Full-year revenues fell by 24% to $2.9 billion thanks to an improvement in the second half after a 40% slump in the first six months. The recovery in retail sales, which account for around 90% of Prada’s total, was driven in the second half by mainland China (+52%), Taiwan (+61%) and South Korea (+22%), while Japan and Europe suffered from the lack of tourists and prolonged lockdowns.Italian Brand Hit By Lack Of Travelers
Meantime, fellow Italian luxury goods group Salvatore Ferragamo said that China and e-commerce had boosted sales in the year to date after the pandemic had pushed the firm to its first full-year operating loss since it listed in Milan a decade ago. Earnings before interest and tax (EBIT) slumped to a $74 million reverse in 2020, compared with a $179 million profit for 2019.
All eyes East: Models backstage prior to the Salvatore Ferragamo Fashion Show during Milan Women’s … [+] Fashion Week. (Photo by Kristy Sparow/Getty Images)Getty Images
Deputy executive chairman Michele Norsa, brought back by the Ferragamo family last year to steer the group through the pandemic and a brand refresh, told analysts in a call that he expected sales in China to maintain double-digit growth.
Salvatore Ferragamo has been hit hard because it is geared towards travelers, with many shops in airports and overall sales fell 33% in 2020. Asia accounts for more than half of group revenues and turnover in the region fell 25.5%. The Florence-based firm said the first nine weeks of 2021 had seen a positive trend in its store network and an 86% jump in digital sales, with China and South Korea both performing strongly.