LONDON — With up to 15 percent of its store network closed at one point, and a relentless focus on full-price selling, Burberry saw revenue shrink 4.3 percent to 688 million pounds in the crucial third quarter.
In addition, after a promising start in October, comparable store sales fell 9 percent in the 13 weeks to Dec. 26, which Burberry said was due to a freeze on seasonal discounting and fewer tourists shopping in outlet stores.
Last November, Burberry had touted a return to growth in comparable store sales in October, the start of the third quarter. It was a hopeful sign of recovery after comp-store sales fell 45 percent in the first quarter, and 6 percent in the second quarter due to COVID-19-related lockdowns, and a freeze on international tourism.
The company put a positive spin on the third-quarter decline, and focused on the larger strategy of cementing Burberry in the luxury space with a focus on full-price sales.
Chief executive officer Marco Gobbetti said despite the challenging environment, Burberry made good progress on its strategic priorities in the third 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 localized 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,” he said.
Burberry said that in the three-month period, full-price sales in leather and outerwear increased in the “low teens,” while digital full-price sales growth was more than 50 percent, with mainland China delivering sales in the “triple digits.”
The company said it saw “high-single-digit full-price” sales growth in the period despite COVID-19-related store closures averaging 7 percent in the third quarter. Up to 15 percent of the store network was closed at the height of lockdown. It added that full-price sales growth was driven by new, younger clients as well as repeat customers.
Digital, Burberry said, remains a key driver of growth, with online innovations and events fueling more than half of full-price growth in the channel. Burberry said it continued to use its digital capabilities “to link customers to our stores in periods of limited traffic or lockdowns, including through our new live chat functionality on .com, virtual appointments and virtual client events.”
In Asia-Pacific, comparable store sales increased 11 percent with full-price sales ahead of the second quarter across the region. Mainland China saw strong double-digit growth, while South Korea continued to perform well with comparable store sales up mid-teens. Japan and South Asia-Pacific continue to be affected by the limited tourist traffic and pandemic-related store closures.
In the EMEIA region, comparable store sales fell by 37 percent, with low tourist demand. The region saw the biggest “swing” in store closures, which moved from 5 percent of stores closed in the second quarter to an average of 19 percent in the third quarter, Burberry said. Continental Europe saw a small increase in domestic customer demand.
In the Americas, comparable store sales fell 8 percent, with full-price revenues up mid-teens, offset by the planned material reduction in markdowns. Full-price sales, Burberry added, continue to be driven by new and younger clients.