LONDON — The August Qixi Festival, or Chinese Valentine’s Day, may have come and gone but the love affair between Burberry and its new crop of Chinese customers lives on.
Burberry’s 3 percent uptick in same-store sales in the key fiscal third quarter came in large part from Gen Z customers across China and Asia-Pacific who were shopping at home and abroad.
The brand said it saw double-digit growth among the Gen Z cohort in the region, while sales in Greater China overall rose 6 percent. In Asia-Pacific, not including China, sales were up 5 percent while in the Americas, they were up 2 percent.
EMEIA, which takes in Europe, the Middle East, India and Africa, was flat, with local shoppers offsetting a decline in tourist spend.
Overall retail revenue in the three months to Dec. 27 rose 1 percent to 665 million pounds at reported exchange, and 3 percent at constant rates. The 3 percent figure outstripped consensus estimates of a 2 percent rise and sent Burberry’s share price up more than 6 percent to 12.93 pounds at the close of trading on Wednesday.
Burberry has been on a charm offensive in China, booking hot young talent to telegraph the brand’s refreshed message of quality, accessibility and lighthearted Britishness.
Key among that new talent is the fresh-faced actress Zhang Jingyi, a former childhood star and a national treasure in China.
She appeared alongside fellow brand ambassadors Chen Kun, Tang Wei, Wu Lei and Zhang Jingyi in the Burberry Year of the Horse campaign that broke in December, and has boosted the brand’s credentials in the region.
Chen Kun, Tang Wei, Wu Lei and Zhang Jingyi star in Burberry’s the Year of the Horse campaign.
Courtesy of Burberry
The brand has been speaking to Gen Z in other ways, too, draping Katy Perry in Burberry scarves and bespoke outfits for her latest Chinese tour, and staging a series of outdoorsy pop-ups across the country.
The company dressed northern China’s popular Chongli ski resort in its signature check; opened a skating rink in Beijing, and a pop-up in Shanghai that featured a coffee truck-cum-scarf bar.
Sources said the brand has been acting swiftly, and with purpose, in the region, which represents one-third of Burberry’s sales.
For the Year of the Horse campaign, Burberry came on strong, fusing British and Chinese cultures in a bid to speak to locals of all generations.
It partnered with British hand-painted wallpaper brand de Gournay and the artist Liao Wenjun on window designs aimed at highlighting the craft and texture of traditional Xuan paper, which is used for Chinese calligraphy and painting.
Their collaboration resulted in a series of multilayered panels showing images in ink of horses in motion. The panels were installed in-store and in the Burberry windows.
Burberry chief executive officer Josh Schulman, who has been leading the brand’s turnaround strategy, said the sales uptick in China and Asia-Pacific was the result of hard work.
“We’ve increased the localization of our storytelling and introduced new influencers and brand ambassadors. Our terrific team in Greater China is truly connecting with customers across age ranges and demographics, in the big cities, and in the secondary cities. We’re reaching a broad luxury audience” in the region, he said.
Schulman said that cashmere knitwear was popular with Chinese customers in the quarter. They bought scarves and the Equestrian Knight Design sweater, which had featured in the festive campaign.
He added that Burberry is resonating beyond China to Gen Z customers around the globe.
“There are some products in particular that have become a must-have for the Gen Z customer, and it’s being led by scarves. They are a Burberry icon, but in the past we had not hero-ed them because we were very focused on putting other products front and center in our campaigns and stores,” he said, adding there are 190 scarf bars now open.
By the end of the current fiscal year in March a total of 200 will have opened.
Bloomingdale’s X Burberry holiday windows.
Lexie Moreland/WWD
Schulman’s strategy to focus on the scarf — an item authentic to Burberry — was smart. Under past management Burberry played up items as diverse and generic as sneakers, logo hoodies and expensive handbags in a bid to compete with the big luxury brands. But those strategies were not sustainable.
With the Burberry Forward strategy beginning to bear fruit, the company said adjusted operating profit would be line with consensus for fiscal 2025-26, which ends on March 31.
The company noted that during the third quarter, it delivered a “higher quality” of revenue across all channels and regions, as it returned to a “shorter, shallower and more discreet” markdown period compared with the corresponding period last year.
Burberry said sales of outerwear and scarves were both up in the double digits, with product momentum extending to handbags and ready-to-wear. The brand also flagged improved retail productivity, “driven by richer visual displays, and globally consistent festive activations.”
Analysts were upbeat about the results, with Deutsche Bank saying the latest numbers should provide “some relief for the luxury sector given the sequential improvement in Greater China.”
The bank said Burberry remains its favored “recovery play” in luxury and the 3 percent uptick in like-for-like retail sales “provides further evidence of increasing brand heat.”
Bernstein said the quarter’s results provide further evidence the Burberry Forward strategy is gaining traction.
“Product momentum, initially concentrated in outerwear and scarves, has now broadened into ready‑to‑wear, supported by Burberry’s strong authority in cashmere. Sequential improvements in Greater China and the wider APAC region — alongside encouraging commentary that Chinese consumer spending has turned positive — should reinforce investor confidence that the turnaround remains on track,” the bank said.
It added that Burberry’s strong engagement with younger consumers “has been a notable bright spot, especially at a time when many brands have struggled to resonate with this cohort amid a challenging macro backdrop in China. The revamped product architecture and refined pricing strategy under Burberry Forward have positioned the brand in an attractive competitive sweet spot.”
Bernstein, too, said Burberry is its “preferred self-help story. Brand momentum remains strong, especially in China; consumer trading down should provide tailwind, and, more importantly, we continue to see encouraging results as management executes on the turnaround strategy that seems convincing.”
During a call following Wednesday’s trading update, Schulman changed gears briefly to talk about Saks Global, downplaying the impact of the bankruptcy on Burberry.
Wholesale represents 12 percent of Burberry sales, and Schulman said the channel is important “as a showcase for a brand at its best, particularly in a moment where a brand is in the midst of a transformation. We love to be present in the best stores and the best websites in the world, alongside our luxury peers, because they’re a place where people can discover Burberry.”
He added: “I have a deep personal connection to the sector and to Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman [where he served as president for five years]. We have confidence in Geoffroy [van Raemdonck, the new CEO of Saks Global] and the new team and we are looking forward to seeing what the next chapter holds.”
Schulman said his hope is that “a somewhat smaller and stronger sector” emerges and that the appointment of new management “bodes well for those institutions to endure as pillars of luxury in America.”
– with contributions from Tianwei Zhang, London
