Burberry Struggles to Improve Despite Boost from Brexit

We know the Brexit vote turned out terribly for the global economy in general but some questions still remained about the impact on British luxury brands like Burberry (Read: Brexit…and Bags). There was some hope that the dramatic collapse of pound against other major currencies might result in a large enough sales boost to counter declines across the rest of the world. We finally have some answers – on Tuesday, the WSJ revealed the details of Burberry’s semi-annual trading call with investors.

Burberry Flagship Store in London on Regent Streets

Burberry Chelsea Heritage Trench Coats

The good news is that Burberry sales in the UK are up almost 30% since Brexit. But as great as that is, it won’t be enough to compensate for severe challenges in the US and Asia. We’ll summarize the details of the call by region:

China/Hong Kong – Following a crackdown on corruption by Party leadership last year, in-country sales for almost all luxury brands have been down. Coupled with the country’s economic slowdown and currency issues over the 18 months, weak numbers were expected in the region. Sales in Hong Kong are down 10% year over year and China sales have taken a hit recently while Burberry upgrades its Beijing stores.

United States – Burberry’s business in the US is more reliant on department store sales than in other countries (around half) and they’ve been heavily discounting inventory. Not only does this decrease sales to these stores, but it also reduces traffic at their standalone boutiques.

Despite the weak pound, Burberry’s numbers aren’t improving as much as expected.. Photo Courtesy: WSJ.

Burberry Banner Bag in Small and Baby Sizes

All in all, Burberry shares have fallen around 8% since the call. The company has its home market in order, but investors really don’t seem to like how the company is navigating the volatile global market. Have you been able to snag any Burberry deals in the U.K. or at department stores here in the US? And readers in Beijing, please be sure to send us some snaps of the renovated stores when they’re done!

Read related articles below:
Part 1: Brexit..and Bags.
Part 2: Buying Bags After Brexit
Part 3: Brexit and the Asian Market
Part 4: UK – Cheapest Prices for Luxury Shopping

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