By Aimee Chanthadavong
Luxury brand Burberry has reported a 17 per cent increase in total revenue due to the combined successes of its retail, wholesale and licensing divisions.
Burberry's total revenues rose to US$1011 million in the first half of the 2010 financial year. The retail division experienced particularly strong growth of 20 per cent, followed by wholesale at 17 per cent. However, licensing declined by 3 per cent on an underlying basis.
Comparable store revenues rose by 9 per cent, with about half of this growth being delivered by Burberry's core categories of outerwear and large leather goods. In the Asia-Pacific region, retail and wholesale revenues jumped 37% per cent, reaching US$275 million.
According to Datamonitor, strong management, involving active cost cutting and rapid expansion in the Asia Pacific region have been key drivers behind these results.
Ruta Perveneckaite, Verdict Research associate analyst, told Retailbiz that Burberry’s investment in Asia, such as acquiring direct control of its Chinese operations, will improve its sales.
“Chinese consumers are more knowledgeable about brands these days, aided by the internet and the growing interest in celebrity and fashion helps to ensure consumers want to keep up to date with the current trends,” she said.
“They are also interested in the history behind luxury brands, thus Burberry is appealing due to its rich heritage. Additionally, Chinese consumers in particular show a huge appreciation for British pieces.”
According to Perveneckaite, Burberry expects to increase its average retail space in China by 15 per cent in the second half of the year as it acquires the remaining franchised stores and opens new outlets.
Furthermore, Datamonitor noted that Burberry has shown leadership in its digital strategy through streaming its runway shows online; allowing viewers to buy garments from its latest collection in real time; and being active on social media platforms.
“Burberry’s active involvement in e-retailing, ranging from the transactional websites in the US, UK and the rest of Europe to online streaming of its catwalk shows giving customers the chance to purchase Burberry products in real-time, allows the company to tap into the growing online market for luxury,” Perveneckaite said.
“The successes of sites selling a range of luxury labels, such as net-a-porter.com, yoox.com or eBay as well as luxury e-commerce through department store websites have proven that luxury consumers are in fact keen on purchasing high-end goods online.
“Furthermore, active communication with existing as well as potential customers through social media platforms, such as Facebook and Twitter, allows Burberry to boost customer engagement and improve loyalty that are likely to translate into higher sales in the future.”