Burberry left about half of its revenue behind during the first fiscal quarter (which closed on June 27th, 2020). The brand expects to lose between 15% and 20% during the 2nd quarter, compared to 2019, which further confirms the savings’ strategy being implemented by the brand and that includes layoffs. The one positive note arrives from China and Korea, as the collaboration with Mr. Bags led leather goods to take off in Asia.
Leather goods take off in Asia
“We will need time to go back to pre-crisis levels – says Marco Gobbetti, CEO of Burberry -. We are encouraged by the improving trends we saw in all regions and the promising data of June. The demand for leather goods was particularly strong in continental China and Korea, as the younger luxury clients get closer to the brand”. The British brand’s comparable sales decreased by 45% in the first quarter (Reuters’ analysts expected -49%), with -20% in June. Overall sales between April and June were of 257 million UK pounds, down 48% at constant rates and -49% at current rates. Burberry highlighted the success, in June, of China and Korea, and how the performance for the countries was above pre-Covid-19 levels, thanks to the increasing internal consumption.
Mr. Bags
The limited-edition Pocket Bag that Burberry retailed on WeChat had particular success, also thanks to the collaboration with fashion Blogger Mr. Bags. “The reactions were excellent: the limited-edition bag was sold-out 1 minute after it was made available. The Pocket Bag models, on the other hand, sold-out 3 weeks after being launched.
Forecasts
The British brand expects sales in the 2nd quarter to be between 15% and 20% less than the previous year. To compensate for this loss, the company plans on strengthening the savings’ strategy by “cutting a number of employees still to be decided upon”.
Image taken from it.burberry.com
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