In purely financial terms that translated into revenue down 1% at £2.733 billion on both a reported and currency-neutral basis, but the fact that it has licensed its beauty operations to Coty had an impact. Revenue with beauty wholesale factored-out was actually up 2%, reaching £2.66 billion
The company said retail comparable store sales rose 3%, much better than the 1% of a year earlier, despite it closing 20 stores. But with the closures weighted towards the end of the year, with seven of them in the final week, it’s hard to tell just how much of an impact this will make further down the line.
In digital, its direct-to-consumer operations continued to deliver good growth (with particular strength in Asia), and mobile transactions represented 40% of DtC revenue. Meanwhile its recent Farfetch link-up offered plenty of potential for future digital growth.
In wholesale, excluding Beauty, revenue was up 2% on a reported basis but was flat currency-neutral, slightly better than expectations due to higher in-season orders. Wholesale growth in Asia Pacific was offset by a high-single-digit percentage decline in the US as it “initiated actions to shift customer perception in the market,” which in plain English means reining-in its distribution to department stores.
For the 2019 financial year, it said trading is in line with its guidance and it’s on track to deliver cumulative cost savings of £100 million.
CEO Marco Gobbetti said: “In a year of transition, we are pleased with our performance as we began to execute our strategy. While the task of transforming Burberry is still before us, the first steps we implemented to re-energise our brand are showing promising early signs.”
While Burberry moved forward as far as retail comparable sales were concerned, the picture wasn’t universally upbeat. Asia-Pacific saw a mid-single-digit percentage rise as it capitalised on stronger tourist trends in the second half. This drove mainland China sales higher, although the high-single-digit increase of the first half slowed in the second due to tough comparisons with a very buoyant prior-year.
Hong Kong improved through the year, delivering high-single-digit percentage growth in the second half, but Korea declined, although it too improved in H2.
In EMEIA (Europe, the Middle East, and India), the business was “broadly stable” year-on-year, although it declined in H2 as the post-Brexit vote mega-boost that UK sales enjoyed in the previous year skewed the figures. That meant the UK only delivered low-single-digit percentage growth, with a decline in the second, as expected.
Continental Europe also declined marginally, with tourist spend softer in the second half, while the Middle East “remained challenging, impacted by the macro-environment.”
At least the Americas were better, which must have been encouraging given that the region has been problematic for a number of European luxury brands due to exchange rates issues and challenges in American department stores. Burberry saw low-single-digit percentage growth in the Americas but an improved performance in H2. And in the US specifically, better traffic trends plus increased conversion underpinned a return to growth during the last six months.
And on the product front globally, Burberry said that “mainline store customers responded positively to seasonal updates and innovation.” A more complete wardrobe offer and full look merchandising drove strength in tops, skirts and trousers in the second half, while innovation in core categories such as the car coat and tropical gabardine performed well. It also saw continued strength in small leathergoods and new handbag launches started from the current spring season.
It’s clear that much of what happened last year was designed to set Burberry up for a prosperous future as it launched itself into its revamp plan and started the evolution of its distribution including those strategic retail store closures. That high-profile collaboration with Farfetch also expanded its reach to over 150 countries and by successfully completing the transfer of its beauty ops to Coty, it put beauty in the hands of an acknowledged expert.
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