Burberry has reported that its new £2,000 handbag named after the Cotswolds has significantly boosted sales, as the English region gains popularity among wealthy Americans. The luxury fashion brand announced a return to full-year profitability, driven by strong performance in the US and China.
Cotswolds Bag Hits Sweet Spot
Joshua Schulman, Burberry's chief executive, stated that the Cotswolds tote bags, which combine leather with the signature Burberry check, have driven the company's best bag sales performance since 2023. He noted that during Mother's Day in North America, customers responded positively to vintage check introductions and Cotswolds lines, hitting a sweet spot on price and value for money in a luxury context.
The Cotswolds region, spanning counties such as Gloucestershire and Oxfordshire, has become a popular destination for affluent Americans, often referred to as the Hamptons of England. Schulman explained that Burberry phased out its Knight bag, which retailed for over £2,400 for certain versions, and introduced the Cotswolds bags at prices around and under £2,000.
Strategic Shift
Schulman, who joined Burberry in 2024, highlighted a strategic shift from the previous management's focus on pinnacle price points without recognisable brand signatures, a strategy he said did not work. The company now emphasises accessible luxury with strong brand identity.
Financial Recovery
Burberry reported pre-tax profits of £49 million for the year ending 28 March, compared to a loss of £66 million the previous year. This turnaround was achieved through £80 million in annual cost cuts, reduced store numbers, and a resurgence in demand from Chinese and North American shoppers. Sales remained flat year-on-year at £2.4 billion when accounting for exchange rate impacts.
Schulman expressed optimism about reaching the £3 billion sales milestone and beyond, noting that revival has been led by core categories like scarves and outerwear, with ready-to-wear items now taking off. Bag sales are also improving, and the brand has strong attraction among younger shoppers.
Regional Challenges
Global sales were impacted by poor performance in Europe and the Middle East, where travel was affected by the Iran war. The Middle East accounts for only 2% of Burberry's global sales. Shares fell 5% on Thursday amid concerns about the conflict's impact.
However, finance director Kate Ferry expressed confidence in meeting analysts' profit expectations for the year ahead, citing great momentum at the start of the year and progress on sales growth and margins.
