LONDON — The luxury sector might be breathing easier as a bullish Burberry, undaunted by slower demand in Mainland China, said Thursday it will continue to open as many as 10 stores there each year, in line with its original strategy.
The optimism comes on the heels of a warning last month of a slowdown in the company’s retail sales, which shook luxury sector stocks and sent Burberry’s plummeting nearly 21 percent. The brand did in fact report a slowdown in revenue growth in the second quarter, due partly to declining footfall in China, but said the country’s underpinnings were solid.
Burberry added it remains keen on the potential for growth in China’s flagship markets in particular.
“In Shanghai, for example, we’re not nearly at the level we should be for such a vibrant, dynamic market,” said Burberry’s chief financial officer Stacey Cartwright, adding that the company planned to open three flagships in that city over the next 12 months.
Burberry currently has 68 stores in 32 cities in Mainland China, and the aim is to get to 100 stores in 35 cities in the medium term.
Cartwright was speaking on a conference call, following a second-half trading update and news that Burberry plans to set up an in-house fragrance and beauty division after severing ties with Inter Parfums SAin March.
Burberry’s bullishness was clearly infectious, as the stock closed up 13.3 percent to 11.36 pounds, or $18.21 at current exchange rates.
Revenue in the three months ended Sept. 30 grew 2.6 percent to 475 million pounds, or $751 million at average exchange rates for the period.
Burberry said that a slowdown in footfall worldwide — in China and the U.K. in particular — contributed to the modest growth.
In the first quarter, growth was 11.2 percent, and in the final quarter of last year, it was 16.1 percent.
Burberry said the lessening in traffic was mitigated by higher average transaction values, and two of the brand’s priciest lines — Prorsum, the runway collection, and London — outperformed in the period.
In September, Burberry reported that same-store sales were flat, with new stores kicking in the 6 percent sales growth in the 10-week period. As a result, it said adjusted pretax profits for the full year would be “around the lower end” of market expectations.
On Thursday, the company noted that the second-quarter picture had improved slightly, with same-store sales rising 1 percent in the full three months, and new stores still contributing 6 percent of the overall retail growth.
In the quarter, Burberry cited a “modest improvement” in all three major regions. Comparable-store sales in the U.S. and Europe were unchanged year-on-year, while Asia-Pacific delivered slightly positive comparable-store growth.
Compared to the first quarter, Hong Kong, France and Germany maintained their “robust” performance, Burberry said, while the U.K. and China slowed. Korea and Italy remained weak.
With regard to the slowdown in China and the U.K., Cartwright said a variety of factors were at play: Gift-giving in China has slowed because of new government regulations, and because of a “macro” slowdown triggered by upcoming elections.
She added that Burberry’s London stores — like so many other fashion and luxury outlets — suffered from the Olympic Games, with footfall in London decelerating in the second half of July and in August.
London’s newly opened @designmuseum will look back on the life and work of Azzedine Alaïa in a show that the designer helped to curate before he died of heart failure last month. The retrospective, which Alaïa had worked on with Mark Wilson, chief curator of the @groningermuseum, will look at the impact of his work worldwide. The show, “Azzedine Alaïa: The Couturier,” will run from May 10 to October 7. Read more about the exhibit on WWD.com #wwdnews #wwdfashion (📷: @zefashioninsider)
@Pharrell and his wife Helen Lasichanh were among the stars that came out to celebrate @rimowa’s first pop-up concept shop. The space, which is located on Rodeo Drive in Beverly Hills, draws inspiration from airport luggage carousels and lounge areas – and features the company’s luggage and accessories. If the pop-up is successful it could pave the way for addition temporary shops throughout the world. #wwdfashion (📷: Owen Kolasinski/BFA)
@carineroitfeld celebrated @crfashionbook’s first calendar last night with a dinner party at Spring Place in Manhattan. Photographed by @stevenkleinstudio, the calendar takes on a fitness theme and features @joansmalls, @gigihadid, @danielle_herrington_ – pictured here – and more. “[Carine Roitfeld] wanted me to feel sexy and she wanted me to be myself and feel it out on my own and do what I felt was right,” said Herrington, aka Miss October. #wwdeye
@saintrecords and @virgilabloh last night at @americanexpress’ “A Night With Success Makers” event. “I always bring it back to community because without that I wouldn’t have the courage,” said Knowles when asked how she has gotten where she is now. Read more highlights from their conversation on WWD.com. #wwdeye (📷: @lizdoupnik)
This Just In: Industry sources have told WWD that Anastasia Soare is rumored to be considering selling her beauty business, @anastasiabeverlyhills. According to those sources, Soare has tapped investment bank Imperial Capital to explore sale options for her eponymous beauty brand –– and with at least $340 million in net sales, this would be a big deal. Put in context of other recent transactions for makeup companies, Soare’s price tag could be in the billions if she were to sell the whole thing. #wwdnews #wwdbeauty (📷: @clint_spaulding)
@assouline’s latest book, “The Spirit of Bentley: Be Extraordinary” captures the adventurous attitudes and opulent lifestyles of @bentleymotors’ most creative owners and enthusiasts throughout the U.K. The 292-page hardcover has a section dedicated to showing its team of skilled artisans and photos of its most colorful owners, from George Bamford to designer @alicetemperley, pictured here by Aline Coquelle. #wwdeye
@google released its report on the most popular search terms this year. For fashion brands, the list was led by @gucci, the luxury brand that stunned the market last October when it pledged to stop using fur. Runner ups were @supremenewyork and @fashionnova, along with more established brands like @louisvuitton, @chanelofficial and @ysl. #wwdfashion (📷: @aitorrosasphoto)
In yet another fashion show shuffle, @elleryland is moving its show in sync with the Paris couture calendar — though the brand is still keeping one foot on the city’s ready-to-wear schedule. Their runway show in January will coincide with the launch of a new strategy: designing two main collections each year instead of four, which will then be released in four drops. “As we all know, the system needs to change. We need to show sooner to give time back to artisans and designers to do what they do best — create,” said founder Kym Ellery. #wwdnews #wwdfashion (📷: @kukukuba)
@maxmara’s classic 101801 coat was the cornerstone of its pre-fall 2018 collection. The design team expanded the traditional double-breasted, kimono-sleeved style into a trapeze coat, lean belted styles and a peacoat and presented them in monochromatic looks – like the camel one pictured here. #wwdfashion #prefall18 (📷: George Chinsee)