Signs of recovery in luxury goods? Following Richemont's sales surge, Burberry's performance also exceeded expectations
Faced with a slowdown in demand in the luxury goods market, British luxury brand Burberry's transformation strategy of returning to its "British roots" has begun to show results. As of the quarter ending in June, its same-store sales only declined by 1%, far better than the market expectation of a 3.7% drop, which drove its stock price to soar by 6.6% at one point
Against the backdrop of a general slowdown in demand in the luxury goods industry, the transformation efforts of British luxury brand Burberry are beginning to show initial results. Previously, Swiss luxury giant Richemont's Q1 financial report exceeded market expectations.
According to an announcement released by Burberry Group on Friday, in the quarter ending in June this year, its same-store sales only declined by 1%, significantly better than the analysts' previous forecast of a 3.7% drop. This better-than-expected performance drove its stock price to soar by 6.6% at one point in the London market, and the company's stock price has risen by a cumulative 27% this year.
Under the leadership of CEO Joshua Schulman, Burberry's revival plan is on track. Among them, the strong growth in the Americas market has become the biggest highlight, offsetting some weakness in other regions.
Returning to "British Roots," Burberry's Transformation Strategy Shows Results
Schulman's core strategy is to bring this brand, known for its classic check pattern, back to its "British roots," and to vigorously promote its iconic outerwear products such as trench coats and scarves. The effectiveness of this strategy has been confirmed in the latest performance. Schulman revealed in a conference call with reporters that sales of lightweight jackets performed well during the period.
Citigroup analyst Thomas Chauvet pointed out in a report that Burberry's plans are progressing step by step, and it is expected that its sales may have turned to positive growth by June.
From a regional market perspective, Burberry's Americas market has become the main engine of growth, with sales increasing by 4% year-on-year, far exceeding the analysts' expected growth of 0.8%. The company attributes this strong performance to successfully attracting new customers. Sales in the Chinese market declined by 4%.
To promote long-term recovery, Burberry is also actively reshaping its brand positioning and organizational structure. Schulman is trying to win back the favor of "entry-level" luxury consumers while reversing the previous management's strategy of pushing the brand into the ultra-high-end handbag market, which has not gained consumer acceptance.
Internally, the company is undergoing significant cost-cutting and efficiency improvements. Schulman announced in May that about one-fifth of the workforce would be cut, mainly affecting office positions in the UK and global retail roles. In addition, to bring decision-makers closer to consumers, Burberry has appointed four regional presidents to the company's executive committee
