Burberry’s investments in mobile technology has paid off, with the luxury fashion brand reporting that the majority of its online sales are now coming via mobile.
Burberry said that over all digital commerce outperformed other channels, with mobile visits accounting for most of the traffic to Burberry.com. But despite the brand’s digital prowess Burberry is still struggling in the increasingly volatile luxury market, particularly in Asia where consumers are just not buying Burberry products.
Over the Christmas period the brand failed to turn around its recent struggles, which has seen share price languishing at a three-year low, with retail revenue up just 1 per cent to £603m. Burberry was also hit by continuing declines in Hong Kong (home to its flagship stores) and Macau, which saw slaes plummet by 20 per cent and the fashion brand said was caused by weak consumer sentiment for both Burberry and the luxury sector as a whole.
The UK, Burberry’s largest market in EMEA, was also negatively impacted by the lack of Asian and Middle Eastern luxury travellers, largely due to the strength of the sterling versus the Euro.
Speaking on a call with analysts, which chief creative officer and CEO Christopher Bailey was noticeably absent, chief financial officer Carol Fairweather said: “Mainland China and Korea both returned to growth and our relatively small business in Japan once again posted exceptional growth. Hong Kong and Macau, by comparable sales, declined by 20 per cent with a continuation of weak footfall for us and the sector.
“While we remain very focussed on cost control, pressures exist on the sector and we expect mid-single digit increase in 2016. With an uncertain outlook for luxury, we will respond by accelerating productivity and efficiency agenda, particularly our ways of working while addressing how to optimise organic revenue opportunities and investment plans.”
Burberry is now pinning its hopes on the Lunar New Year in China to turnaround its woes in Hong Kong and Macau. It will likely look to the success of its festive campaign that Fairweather said was partly responsible for returning mainland China to growth thanks to its marketing strategy, fast tracking products and consumer insights.
In stark contrast Ted Baker reported a bumper Christmas with founder and chief executive Ray Kelvin revealing that sales in the eight weeks to 9 January were up 10.1 per cent despite warm weather conditions.
The company will continue to focus its attention on overseas expansion with China in a particular market of interest.