Burberry to invest heavily in new stores in China as mainland customers take a liking to its redesigned monogram look

Louise Moon

Burberry Group, the British outfitter that turned the camel trench coat into a fashion statement, said it’s investing heavily to add stores in China, as mainland consumers have taken a liking to the luxury brand’s redesigned look.

China’s middle class led the Asia-Pacific region’s “high single-digit” percentage revenue increase in the first quarter ended June, outpacing Burberry’s worldwide sales growth of 4 per cent, said chief operating and financial officer Julie Brown in a telephone conference. The new look by creative director Riccardo Tisci with monograms of the brand’s founder Thomas Burberry – a departure from its famous camel tartan – was launched in May.

“This [growth] was driven by mainland China where customers responded particularly positively to the new product lines,” Brown said. “The monogram has resonated very strongly with the Chinese. We have attracted more millennials with that range.”

The success of the new look is a coup for Tisci, who joined Burberry from the French brand Givenchy in March 2018. His collections, part of a multi-year strategy to transform the 163-year-old fashion house, are a breath of new life for a brand that began in 1856 as an outdoors attire store in Basingstoke in Hampshire, England.

Burberry’s new-look monogram, designed by its creative director Riccardo Tisci, is featured at a window outside a Burberry office in central London on July 12, 2019. Photo: REUTERS

Burberry threw its full weight behind the new look, with Tisci’s designs taking up half of all products in store, and appointing the supermodel Gigi Hadid to be the face of the most recent campaign, covering coats, tote bags, shoes and scarfs. The chief designer’s new collections delivered strong “double-digit” percentage growth compared with other collections last year, Burberry said.

Social media has played a key role. On the 17th of each month, Burberry would launch a new product as part of its B Series, only available for 24 hours on Instagram and WeChat. The channels have had “double-digit” increases in engagement levels, with Chinese consumers responding particularly well, said Brown.

An advertisement containing a jacket with Burberry logo pattern is pictured at a window of a Burberry store in central London on July 12, 2019. Photo: REUTERS

Burberry had also been helped by the Chinese government’s cuts in sales tax and import duties, aimed at encouraging domestic consumption instead of taking the Chinese currency to shop abroad. As a result, spending on the mainland increased by the “mid-teen” percentages, even as the world’s second-largest economy grew at its slowest quarterly pace since 1992 in the three months ended in June.

It’s a sales growth that had not been dented, not even by the year-long US-China trade war, Brown said. The Asia-Pacific region contributed £1.1 billion to Burberry’s £2.7 billion (US$3.356 billion) in sales in the last financial year ended March.

Burberry opened three shops recently in Beijing and Shanghai, home to the brand’s China flagship store. Though more investments are planned in Shanghai, Brown did not say how many shops will open in China or the wider region.

The openings come despite the brand closing a tenth of stores globally, as part of its transformation. Nine have closed so far, according to Brown.

Over in Hong Kong, recent rallies over a controversial extradition law in Hong Kong, which attracted an estimated 2 million protesters on June 16, have hit sales compared to the same period last year.

“Overall this did contribute to a softer performance in the first quarter, so we saw a slight decline in Hong Kong,” said Brown.

Burberry’s shares jumped by as much as 15.5 per cent in early London trading to £22.99, the highest since August last year.

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