China’s handbag demand ‘encouraging’ for Burberry
CEO Marco Gobbetti said: “We are encouraged by the improving trends in all regions and the promising exit rate for June. We saw an excellent response to new product launches in recovering economies as well as online. Demand for leather goods was particularly strong in Mainland China and Korea, bringing new, younger luxury customers to the brand.”
In April, Burberry launched a leathergoods campaign in Mainland China, featuring pop-up stores incorporating an augmented reality experience, as well as a limited edition Pocket Bag for influential fashion blogger Mr Bags’ WeChat followers. “The reaction was exceptional with the limited edition bag selling out within a minute of becoming available and Pocket Bag styles overall selling out within three weeks of the campaign going live,” said the company.
Comparable sales declined 45% to £257 million Q1, easing to -20% in June.
The group also gave more details on upcoming organisational changes. “We are evolving our approach to product, creating three new business units covering Ready-to-Wear, Accessories and Shoes. We intend to pool expertise within each unit to enhance our product focus, increase our agility and elevate quality. We are also proposing to further streamline our office-based functions and improve our retail efficiency in certain geographies outside the UK.
“Subject to consultation, we expect these changes, which include office space rationalisation, to deliver savings of around £35m in FY 2021, with annualised savings of £55m and an associated one-off restructuring charge of £45m. These savings are incremental to our previously announced £140m cumulative cost saving programme. Conditional on the macroeconomic recovery from COVID-19 and luxury industry growth, we will be able to reinvest these savings into consumer-facing activities. These include pop up stores, visual merchandising, digital activations, events as well as marketing.”
