Burberry Grew By 4% In The First Quarter And 15% In Chinese Market.

A series of transformation and reorganization plans taken by Burberry after being taken over by the new team have achieved initial success and are regain public attention.

According to the fashion business news, the British luxury group Burberry announced its first quarter results yesterday. In the three months ended June 29th, the group's revenue grew 4% to 498 million pounds over the same period last year, reaching two times the analyst's expected growth, a 4% increase over that of the store's sales, and a significant improvement over the previous fiscal year.

During the period, the sales performance of Burberry in the UK market was the most robust. Sales in the Asia Pacific region also recorded a high digit growth rate, which was mainly driven by an increase of 15% in the Chinese market. The sales in the EMEIA area benefited from the increase in tourism consumption and the low digit growth. The income in the North American market was weak, and there was no increase compared with the same period last year.

Burberry chief executive Marco Gobbetti said in the earnings report that the increase in performance was mainly due to the product of the new creative director Riccardo Tisci and the promotion of the Chinese market, including double-digit growth in sales of brand men and women, and the decline in sales of accessories, which was offset by the growth of new products.

The chief financial officer and chief operating officer, Julie Brown, also revealed in the conference call after the earnings report that as of the first quarter, the proportion of new series in the supply of main store products has expanded from 10% to 15% in March to about 50% in June. In May this year, Monogram, which was formally mounted in several stores in the UK, China and Japan, received more positive response from the market, which stimulated Burberry to increase its same store sales.

Julie Brown stressed that the Monogram series is popular among the millennial consumers in China. At the same time, Burberry continues to attract the attention of local young consumers through the three party cooperation channels such as social media WeChat and Tmall. This also has a positive impact on the growth of the first quarter of the brand. According to him, Chinese consumers contributed Burberry 40% of global sales in the quarter.

At present, Burberry has at least recovered the situation of the long absence of iconic products. Fashion Business News reported earlier that due to the lagging pace of product upgrading, Burberry's development in recent years was not smooth. Its performance began to decline from 2016, and the first tier of luxury goods has been dropped.

Some analysts pointed out that although the original CEO and creative director Christopher Bailey led, Burberry not only first launched the fashion show live broadcast, but also first entered the fashion show and technology crossover. It was also first implemented in the luxury industry, that is, buying strategy, but it never hit young consumers, and had not yet found a balance between the classic and younger brands.

In the end, Burberry's constant Lingering between conservatism and change depleted the patience of management and investors. In October 2017, Christopher Bailey decided to leave the post of creative director and withdraw from the board of directors after the contract expires.

In order to speed up the transformation, Marco Gobbetti and Riccardo Tisci have developed a series of positive transformation plans for Burberry. They are determined to change the positioning of Burberry medium price luxury brands, to evolve to high-end luxury brands, and to regain the price dominance, thereby enhancing the brand's profitability and building the brand to younger.

In August last year, Burberry suddenly announced its brand new non serif typeface logo and Thomas Burberry's letter printing on its Instagram account, announcing that Burberry, which has more than 160 years of history, started to brand innovation. After the release of the new brand image, some commentators believe that blackbody logo implies that the brand has the tendency to become brand oriented. At present, the brand new image of Burberry is indeed inspired by the trend of brand operation.

Subsequently, Burberry boldly broke the traditional luxury new cycle, adopted the "drop" style new mode of street brands, launched the new "B Series" on a monthly basis, and sold them through the multi media platforms such as Instagram, WeChat, Line and Kakao.

Riccardo Tisci is very clear that even though people mention Burberry, they will think of classical grid, but the latter has too many traditional images to satisfy the aspirations of young consumers. Burberry needs to create a brand new symbol. If we simply sell brand Logo or have the suspicion of overflowing brand, then the TB printing extending from the brand historical archives can take into account the luxury brand tradition and youthful attitude, and achieve the balance of certain values.

Careful observation is not difficult to find that the transformation plan of Burberry includes a very strong marketing campaign. Both online and offline try to strengthen the social sense of output of TB printing, and deepen the public's memory of new brand symbols. Last month, Burberry suddenly launched a high-profile marketing campaign in two luxury - intensive cities in Shanghai and Hangzhou for the latest sale of the Thomas Burberry Monogram printing series.

Reuters analysts pointed out that Burberry's "printing marketing" is so loud that it reflects the fierce competition of high-end brands for young consumers. The growth rate of Burberry in China has lagged behind other luxury brands. Even if excessive marketing has the risk of losing brand image, Burberry's revenue from printing accounts for 38% of its total sales, far below the Gucci and Louis Vuitton's 60% and 75%, and there is still much room for development.

In terms of distribution channels, in order to clarify the brand positioning, Marco Gobbetti said in May 2018 that the group would substantially reduce the number of stores that affect the wholesale business of the brand, and some poorly performing shopping malls "store stores" and stores away from high-end luxury consumer communities would be closed.

In the 2019 fiscal year ended March 31st, Burberry closed 35 stores and opened 17 new stores. In order to achieve the goal of saving 120 million pounds before 2020, Burberry also plans to close about 10% more than 38 stores.

At the same time, Burberry also upgraded the existing stores. In the architectural aesthetics and visual presentation, 14 flagship stores including the brand Regent Street in London, Bond Street and Shanghai Kerry Center were rebuilt. The brand new TB printing symbol was installed on the exterior walls of the store. A new plan to improve the store function in more than 50 other stores in the main city has not been introduced.

Burberry is also accelerating the re establishment of the brand's social responsibility image. According to the latest report of Ellen MacArthur foundation, Burberry will cancel unnecessary plastic packaging or use recyclable degradable plastics before 2025. Earlier, Burberry also announced that it would no longer use animal fur and would gradually eliminate existing fur products. The brand also plans to achieve carbon neutralization targets in 2022, and will reduce the group's total greenhouse gas emissions by 30% by 2030.

Burberry is also aware of the negative impact of the incineration of 28 million 60 thousand worth of unsalable products. In the past two years, the cost of Burberry waste has increased by 50%. In the past five years, the total value of over 90 million pounds has been destroyed, so as to ensure that goods do not flow into the black market or the counterfeiters.

For the 2020 fiscal year, Burberry expects sales to grow faster as new products come on stream, but with reduced discounts and other measures, business profits will fall further than the 2019 fiscal year.

After the release of the earnings report, Burberry closed up 14.39% to 22.7 pounds on Tuesday, with a market value close to 10 billion mark and a record of 9 billion 370 million pounds.