Burberry bounces back from the pandemic

The firm, which has made its most iconic products in Castleford and Keighley in Yorkshire for over 100 years, is ramping up the rollout of new stores targeted at higher spending customers.

Burberry said that as global demand recovers from the effects of Covid-19, its Yorkshire manufacturing operations have continued to perform well.

Outerwear, which is made in Yorkshire, saw improving momentum in the half with second quarter full price sales increasing by 12 per cent.

It added that Burberry Business Services in Leeds is going from strength to strength, driving process efficiencies and cost savings ahead of plan. The firm said that it is investing in capabilities in the Leeds office.

Burberry reported pre-tax profits of £191m for the six months to September 25, up from £73m a year ago.

It saw comparable store sales in the first half return to levels seen before the pandemic struck, up 1 per cent on a two year basis and with full price sales up 18 per cent.

When compared with last year’s pandemic-hit first half, same store sales jumped 37 per cent after a 90 per cent hike in the first quarter and 6 per cent rise in the following three months.

Burberry, which last week named Gianni Versace boss, Jonathan Akeroyd, as its new chief executive, said it is accelerating refurbishments of its flagship stores to its new format as it looks to attract high spending shoppers.

The group now has 15 of these new stores currently and is looking to expand this to 50 by the end of the financial year. It said the rollout of the new stores was progressing well.

“These stores are resonating very well with our customers, attracting high spending clientele,” said Burberry.

The second quarter figures showed the impact in August of re-imposed Covid-19 restrictions in China, although September saw a marked recovery.

Burberry said: “Mainland China was up over 40 per cent even as wide reaching regional lockdowns and extreme weather impacted our performance in August in particular.”

It said that sales were still below pre-pandemic levels across the Europe, Middle East, India and Africa region – including the UK – as tourist trade continues to be impacted.

It said around 50 per cent of annual sales in the region typically come from tourists, with London in particular having been knocked by travel restrictions in the pandemic.

Sales in the region were still 25 per cent lower on a two year basis across the second quarter, although this is better than the 38 per cent fall in the previous three months.

The firm said: “Encouragingly, local customers were positive across the major territories with the region seeing a sequential improvement quarter-on-quarter."

The group recently announced that Mr Akeroyd will take the helm on April 1 next year to replace outgoing boss Marco Gobbetti, who in June announced unexpected plans to quit after nearly five years in the role.

Mr Gobbetti leaves at the end of the year to head up Italian rival Salvatore Ferragamo, with chairman Gerry Murphy leading Burberry on an interim basis until Mr Akeroyd joins.

Freetrade analyst, Gemma Boothroyd, said: “By the skin of its teeth, Burberry’s managed to get back to its pre-pandemic levels.”

She added: “Investors will be waiting to see whether Burberry’s next set of earnings can give meek European revenues a boost.

“If not, there’s a big weight on Akeroyd’s shoulders to get the British brand booming at home again.”

In June, Burberry sold the 10 acres of land it owned in Leeds next to the Grade I listed Temple Works building.

Build to Rent developer and operator Platform bought the large city centre gateway site in Leeds from a subsidiary of Burberry. The acquisition continues Platform’s policy of targeting London and key regional towns and cities.