Burberry has ridden back to profit, powered by a resurgence in the Chinese market and a successful Lunar New Year collection. The FTSE 100 fashion house reported a £49m pre-tax profit for the year to March, meeting analyst expectations with £2.4bn in revenue.
China Market Drives Growth
Sales in Greater China rose 10% in the three months to March, pushing full-year growth in the region to 4%. China contributed £670m in revenue, making it Burberry's second-largest market after Europe, the Middle East, and Asia (£821m). Chief Executive Joshua Schulman emphasized: "It's especially important to win in China."
Lunar New Year Collection Boosts Appeal
Burberry's Chinese New Year range, featuring the iconic trench coat and checked scarf in fire horse red, resonated with consumers. A marketing campaign starring Chinese actor Wu Lei and documentary films celebrating China's natural landscape further strengthened the brand. Schulman noted that the Burberry scarf became a "social media sensation in China," driving a new generation of young customers.
Turnaround Strategy
The brand's return to profit follows a turbulent period that saw it slip out of the FTSE 100 and implement a £60m cost-cutting plan, including 1,700 job cuts. Burberry refocused on its "Britishness" after a short-lived push into ultra-high luxury. According to AJ Bell's Dan Coatsworth, "Burberry's return to a more mid-tier and aspirational customer base is a tacit admission that in trying to compete at the high end of luxury it had flown too close to the sun."
Future Outlook
Despite the positive results, analysts caution that sustaining growth in China remains challenging. Dan Lane of Robinhood UK said: "You can stabilise a brand through discipline but premiumisation requires desire – if Burberry can maintain and lift interest in the fragile Chinese market and navigate a higher-inflation environment, today could well look like the turning point."
Burberry plans a finale to its 170-year celebrations in Shanghai, underscoring its commitment to the Chinese market.
