Burberry’s sales shrink by 1.2% in 2017 during full-swing transition

Burberry ends up a transitional fiscal year. The British luxury group, which is listed on the London Stock Exchange, ended 2017 with a 1.2% decline in turnover, to 2,7 billion pounds (3,1 billion euros), according to preliminary results released today. The group's profit, on the other hand, increased by 2% to 293.6 million pounds (334.1 million euros).

Last fiscal year (ended on March 31) has been transitional for the company, as it finished a four-year leadership period spearheaded by Christopher Bailey. Last July, Burberry hired Marco Gobbetti, former executive at Céline, as its new CEO, and appointed Riccardo Tisci as creative director last March.

Gobbetti revealed his new strategy for the brand last November, focused on raising Burberry’s market positioning again. “While the task of transforming Burberry is still before us, the first steps we implemented to re-energise our brand are showing promising early signs”, said Gobbetti during the results’ presentation.

Burberry posted a net profit of 293.6 million pounds (334.1 million euros)

“With Riccardo Tisci now on board and a strong leadership team in place, we are excited about the year ahead and remain fully focused on our strategy to deliver long-term sustainable value” the executive added.

In the preliminary results’ presentation, Burberry said that its operating profit has benefited from good stores’ performance, savings up to 44 million pounds (50 million euros) in operating costs and an improved profitability of the cosmetics’ range due to lower inventory and marketing expenses.

Last year, Burberry signed an agreement with Coty to accelerate the growth and development of its beauty collection, which was previously managed by an in-house team. The alliance became effective last October.

The company has re-established a double-headed structure with Marco Gobbetti and Riccardo Tisci

Excluding cosmetics’ sales through wholesale, Burberry's turnover grew 2% in 2017, to 2,660 million pounds (3,027 million euros). Sales in Asia Pacific, which still accounts for the majority of group revenues, grew up 4% to 1,081 million pounds (1,230 million euros). It is followed by Europe, the Middle East and Africa (Emea), where the brand posted a 4% increase to 938 million pounds (1,067 million euros), and America, with a turnover of 611 million pounds (695 million euros), 3% less than in the previous year.

By product categories, accessories generated almost half of sales, with 1.046 million pounds (1.190 million euros) in revenues, up 1%. Women’s, men’s and children’s collections posted increases of 2%, 4% and 8%, respectively.

Burberry is reorganizing its store network and closed 34 shops last year

On the other hand, like-for-like sales grew by 3%, compared to the 1% increase registered in the previous year. Burberry ended fiscal 2017 with 449 own-operated stores and 46 franchises. During the period, the group closed down 20 full-price locations, ten concessions and six outlets, and opened fourteen new points of sale.

Besides teaming up with Coty, the group joined forces last year with Farfetch to extend its reach to more than 150 countries and it acquired this month its Italian leather-goods supplier CF&P.

Looking ahead to 2019, the company expects a 1% drop in turnover in own-stores due to closures, while wholesale will post double-digit shrinks. Burberry aims to cut costs by one hundred million pounds (114 million euros).