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.
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye
Did you know: @carlychaikin of "Mr. Robot" has been painting for about a decade? The actress, who plays Darlene on the show, is a self-taught artist who lists Salvador Dalí and Chuck Close as some of her idols. Chaikin told WWD that painting is a form of meditation for her — A much-needed one given the intensity of "Mr. Robot." See a piece Chaikin is working on at WWD.com (📷: @jilliansollazzo) #wwdeye