Burberry store in Hong Kong. Getty Images.
Burberry Group Plc’s sales remained below 2019 levels despite a quarterly jump, showing the British brand is trailing some of its luxury peers in recovering from the depths of the pandemic. The shares fell as much as 10 percent.
Retail comparable store sales in the three months through March soared 32 percent, the company said in a statement Thursday. That was in line with its own forecast. But revenue was still 5 percent lower compared to the comparable quarter two years earlier.
Sales at luxury rivals LVMH and Hermès during the same period both beat 2019 levels.
The performance shows “there is still work to do,” at Burberry, according to Luca Solca, analyst at Sanford C. Bernstein. The company is cutting the number of promotions as it seeks to preserve its upscale image among consumers looking to splurge on quilted Lola bags or Barn jackets.
That could make for tough sales comparisons against previous periods for Burberry, one of the first luxury companies to drop its financial guidance last year when Covid-19 shuttered stores. The fashion house said next year its operating margin growth could be impacted by increased investment in the business and higher operating expenses as business returns to normal, but will grow in later years.
Luxury brands are betting more on China, where the pandemic came quickly under control last year. Burberry opened a store with the local tech giant Tencent in Shenzhen last summer, mixing physical and digital experiences. Comparable store sales in Asia Pacific soared 75 percent in the fourth quarter, led by China and South Korea.
But the brand is having to navigate a tense relationship with the country’s authorities amid calls to boycott its products in retaliation for comments it made on cotton sourced in the Xinjiang region of China. That episode led to the termination of a partnership with Tencent for its Honour of Kings video games.
Burberry shares were 7 percent lower at 8:10 a.m. in London.
By Angelina Rascouet