Burberry: China’s covid restrictions flatten sales as Europeans ramp up luxury item spend
Heavy Covid restrictions in China weighed down sales for luxury British fashion giant Burberry in the third quarter of last year.
In the 13 weeks to December, the UK firm reported £756m in retail revenue in its comparable store sales around the world, a one per cent increase on the previous year.
Sales in China were disappointing, down 23 per cent, as restrictions on people’s movements prevented consumption.
This comes after reports that China’s economy is growing at the slowest pace since the 1970s, barring the pandemic, due to tough zero Covid restrictions hitting spending, figures out yesterday reveal.
At the start of the year China relaxed many of its Covid restrictions after protests, leading to a spike in spending but also a huge increase in Coronavirus cases.
Outside to the world’s biggest market, sales of Burberry in store was up 11 per cent, including a 19 per cent jump in Europe, the Middle East and Africa, which have largely had Covid restrictions pulled.
Looking ahead to the near future, Burberry said its targets “remain unchanged”, and it looks to target high-single digit revenue growth.
“Based on the effective foreign exchange rates as of 30th December 2022, we expect a currency tailwind of circa £160m on revenue and circa £70m on adjusted operating profit in the full year 2023.”
Jonathan Akeroyd, chief executive of Burberry said: “Overall, we are pleased with our performance in the third quarter as double-digit revenue growth outside of Mainland China offset the impact of COVID-19-related disruption there”.
“Europe in particular continued to perform well, driven by strong trading over the festive period, and leather goods delivered another quarter of double-digit growth globally.”
Akeroyd said he was, “confident in our ability to reach our medium-term targets”, and that the firm was looking to “realise Burberry’s potential as the modern British luxury brand”.
He said Burberry was looking forward to unveiling Daniel Lee’s debut collection for Burberry when it returned to London Fashion Week in February.