UK Edition
Lambskin handbags help Burberry shrug off Hong Kong unrest
Lambskin handbags and a new range of trainers boosted sales at Burberry in the run-up to Christmas despite severe disruption from violent pro-democracy protests in Hong Kong which kept buyers in the city at home.
Revenue at the British fashion house rose by 1pc to £719m in the 13 weeks to Dec 28 compared to a year earlier, while sales at stores that have been open for more than a year rose by 3pc.
But sales in the important Hong Kong market halved as clashes between police and protesters in the territory dented demand.
Burberry's chief financial officer Julie Brown said sales of a new range of trainers enjoyed double digit growth during the period, while its Lola lambskin handbags were a hit with customers.
The firm's trainers start at £310, and Lola bags sell for more than £1,000.
Burberry now expects full-year sales to grow by a low single digit percentage in the year to March, compared with flat revenue previously predicted.
However, fears over the outbreak of a new coronavirus in China similar to Sars continued to weigh on Burberry’s shares, which fell by more than 4pc in early trading as the company has become increasingly reliant on wealthy buyers in the country.
Ms Brown said: “We’re keeping the situation under review and monitoring it every single day.”
Burberry has been going through a major strategic overhaul under chief executive Marco Gobbetti. He wants to take the brand upmarket with an improved range of handbags while overhauling its store estate.
Ms Brown said ranges by creative director Riccardo Tisci, who joined from Givenchy in March 2018, had been popular with customers and now represent three-quarters of products in Burberry’s stores.
She said: “There’s been a very strong response from consumers for the new ranges and Riccardo’s collections have continued to grow in double digits."
But some analysts remain sceptical that Burberry can ramp up sales growth and improve profits in the near future.
Piral Dadhania, of RBC, said: “Management has made good progress so far building the foundation to revitalise the brand.
"But Burberry is now up against a less favourable external and competitive backdrop at a time when it has to show the market that it is on track."