LONDON (Reuters) - Younger and urban customers helped return Burberry to growth in October, with the British luxury brand’s comparable quarterly store sales falling by less than expected despite the ongoing effects of the coronavirus crisis.
Burberry was hit hard by the COVID-19 pandemic in its first-quarter, with 60% of stores closed at the peak and sales falling 45%, but said on Thursday they had rapidly bounced back as it attracted new buyers for its brand.
“We adapted quickly to this new trading environment and since July we have seen a rapid recovery in sales,” Burberry Chief Financial Officer Julie Brown told reporters. The Americas staged the biggest recovery, with 21% growth in the quarter.
“We have attracted a new younger urban consumer,” she said, adding this had driven demand for Burberry designer Riccardo Tisci’s “TB” monogram ranges, while there had also been “real traction” in leather goods.
Analysts had expected comparable sales to fall by 12% in the second quarter, but Burberry said on Thursday the drop was only 6% and that it had seen strong double-digit growth in mainland China, Korea and the United States in the period.
“While the virus continues to impact sales in EMEIA (Europe, Middle East, India and Africa), Japan and South Asia Pacific, we are encouraged by our overall recovery and the strong response to our brand and product, particularly among new and younger customers,” Burberry Chief Executive Marco Gobbetti said.
Shares in Burberry, which had fallen 27% year-to-date, were trading up 3% at 16.70 pounds at 1000 GMT.
Analyst Thomas Chauvet at Citi said Burberry’s positive sales in October were in line with most peers, but on balance the results were a positive for the shares.
Although more than 10% of its stores were closed globally following new lockdowns in Europe, including in London and Paris, Brown said Burberry had decided to reduce its markdowns in the second half.
The decision would reduce revenue in the second half, she said, but it would strengthen the brand.
“We are going to be delaying it, and we’re going to be shortening it and putting less inventory into markdown.”
Burberry said revenue for the six months to Sept. 26 was 878 million pounds ($1.16 billion), down 31% on a year earlier but better than analysts had predicted, while adjusted operating profit fell 75% to 51 million pounds.
($1 = 0.7579 pounds)
Editing by Sarah Young and Alexander Smith
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