Reversing 2012 Slowdown In China, Burberry Is Back

Double-Digit Sales Growth For Hong Kong and Mainland China

Rebounding from a global sales slowdown in September of last year that sent tremors through high-end brands across the Chinese market, this week British luxury brand Burberry reported optimistic tidings for the year ahead, recording a nine percent increase in revenue after a “better than expected” holiday season beat company forecasts. According to Reuters, Burberry’s latest figures “showed double-digit underlying sales growth for Hong Kong and China in the third quarter, a significant jump from a ‘marginally positive’ growth in the second quarter.”

Surely elated with the news, Burberry CFO Stacey Cartwright attributed the brand’s better performance in China to “an improvement in wider consumer sentiment” and “self-help measures.” Among the most effective sales drivers in China at the end of the year, Cartwright noted, was cross-selling — for example, persuading a customer to buy a belt to match a new handbag.

Burberry’s third-quarter retail revenue was up an underlying 13 percent to £464 million (US$746.7 million), with scarves, mens’ tailoring and accessories outperforming other categories and the label selling a higher proportion of goods from its top-end Prorsum and London lines. While wholesale revenue, at £120 million ($193 million) was down 5 percent, Cartwright stressed that retail, as opposed to the wholesale business, represents 75 percent of Burberry’s total sales. As Cartwright told Reuters, ”We always talk about retail being the leading indicator and wholesale being the lagging indicator, so [it's] much more important to focus on the retail numbers.”

Having wrapped up 2012 in style, Burberry queues up with a handful of other brands that are hoping for a smoother year ahead in the Greater China market. As Jing Daily wrote yesterday, names like Salvatore Ferragamo, Ermenegildo Zegna, Neiman Marcus, and Net-A-Porter all show signs of great confidence as 2013 kicks off, either expanding into lower-tier cities (in the case of Ferragamo) or ramping up e-commerce efforts (in the cases of Neiman Marcus and Net-A-Porter). As Cartwright of Burberry put it, “All of the economic indicators continue to point to very nice growth out of [the China] market and particularly within the luxury sector for the years ahead.”