Younger consumers drive Burberry's sales rebound despite Xinjiang cotton boycott

Burberry's sales in Asia Pacific witnessed a rebound during the first quarter of its financial year (Q1 FY22) driven by new, local and young customers buying across its core categories including handbags and trench coats. Sales for the region was up 27% year-on-year and up 7% compared to 2019, Burberry said in its financial statement. Despite the Xinjiang cotton row earlier this year and the calls to boycott Burberry in Mainland China, the brand witnessed continued strong growth in the country as well as in South Korea. Burberry added that sales in Mainland China increased more than 55% and South Korea more than 90% compared to pre-pandemic levels.

The Xinjiang cotton row heated up earlier this year as Chinese shoppers were boycotting companies that were refusing to use cotton grown in Xinjiang province. Brands including H&M, Nike and adidas also copped flak as they were among the few brands that pledged not to use cotton from the Xinjiang province, citing accusations of human rights violations of the Uyghurs in the region. Overall, Burberry's retail revenue for the 13 weeks to 26 June increased 86% to US$662 million, while comparable store sales rose 90% on the same period last year and 1% compared to 2019.

In the last quarter, Burberry launched a dedicated handbag campaign centred around its new handbag shape, the Olympia. Featuring Kendall Jenner, FKA twigs and Shygirl, Burberry said the campaign generated an excellent response from the media and consumers, particularly across social media where consumer engagement on its campaign posts grew by double-digit compared to its Pocket campaign. At the same time, newsfeed posts reach and engagement grew +96% and +58% respectively versus the Pocket campaign on Instagram.

Digital also continued to see excellent growth with full-price sales more than doubling compared to pre-pandemic levels. Burberry said it continued to enhance product discovery, launching its handbag hub on Burberry.com. The luxury brand also introduced several pilots to further strengthen the integration between its offline and online channels, as well as a unique digital collaboration with Mythical Games for its first limited-edition digital vinyl toy for the multiplayer video game Blankos Block Party.

At the same time, it continued to drive appointments and engage its customers in-store through activations, including a programme of 70 leather goods pop-ups and pop-ins in high visibility locations. It has also begun rolling out its new store concept, with seven stores across Asia now utilising it. According to Burberry, the concept will transform how customers will experience the brand and product in a uniquely British setting. Currently, Burberry is operating 454 stores, concessions and franchises globally.

CEO Marco Gobbetti, who was reported in June to be leaving the company to lead Ferragamo in his home country of Italy, described this to be "an excellent start to the new fiscal year".

"We saw strong growth across our strategic categories, in particular leather goods and outerwear, and exited markdowns in digital and mainline stores. Despite the continuing challenging external environment, we are very pleased with the progress against our strategy. With the company firmly set on a path of growth and acceleration, we are confident of achieving our medium-term goals," he added. Shortly after news of Gobbetti's impending departure broke, media reports including CNN Philippines said Burberry saw shares tumble by 10%.

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