Burberry's poncho "innovation and investment" drives sales as design worn by Alexa Chung and Cara Delevingne woos customers

 
Lynsey Barber
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Burberry's monogrammed poncho was sported on and off the catwalk (Source: Getty)

The figures

Revenue at Burberry for the second half was up nine per cent on the same period the previous year to £1.4bn.

Retail sales were strong, up 13 per cent to £1bn on an underlying basis with America and Europe hitting double-digit growth compensating for a continued slowdown in Asia.

Licensing revenue was up three per cent to £33m and wholesale remained flat at £331m.

The brand's typically British offering of scarves and trench coats were a hit with customers and "investment and innovation in ponchos drove exceptional growth", the firm said.

The luxury retailer expects retail growth to remain in single digits for 2016 while licensing is forecast to drop 40 per cent with the expiration of licensing in Japan.

Why it's interesting

Burberry felt the effects of forex movements in the first half but expected to brush that off in the second half.

One of the bellwethers for luxury retail, the British brand has also felt the slowdown in luxury spending in Asia.

As both chief executive and creative chief, with a hefty paycheque to go with it, Christopher Bailey who took over from Angela Ahrendts last May is seeking to prove a brain for business as well as design.

The fashion brand has also been the target of takeover speculation, which investors responded to positively.

What Burberry said

"We are pleased to report a robust second half performance, despite an uncertain external environment. Total revenue grew by 9 per cent underlying and 13 per cent in retail, as customers responded strongly to product innovation, especially in our core British-made heritage trench coats and scarves, while we continued to invest in digital and retail initiatives, including flagship openings in Los Angeles and Japan," said Burberry boss Christopher Bailey.

"We anticipate external challenges will continue in the current year, but remain confident in our long-term strategy to build the Burberry brand and business globally."

In short

The British brand with Bailey at the helm has wooed customers with products such as the hit monogrammed poncho as seen on models and celebrities, converting interest into actual sales in a challenging retail environment.

As Paul Thomas of consultancy Retail Remedy said: "Christopher Bailey and Burberry have proved the doubters wrong."

Combining the roles of CCO and CEO raised a lot of eyebrows, but Bailey has carried on where Ahrendts left off. That Burberry has recently become the subject of takeover speculation is testament to the strategy Bailey is delivering," he added.

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