Burberry seeks to double online sales and raise overall target to £5bn

The chief executive of Burberry plans to boost the British luxury group’s annual revenue to £5bn by boosting sales of leather goods, footwear and other accessories and doubling e-commerce revenue.

Jonathan Akeroyd, who succeeded Marco Gobbetti this year, said revenue should reach £4bn a year in the “medium term”, with sales of leather goods, shoes, women’s ready-to-wear and outerwear growing by 50%. Chief Financial Officer Julie Brown said “medium term” meant three to five years.

Akeroyd added that “over the long term”, accessories should account for more than half of the group’s sales, which will total £5bn. Burberry There will be a renewed focus on its quintessentially British character. Akeroyd has hired British designer Daniel Lee to replace Riccardo Tisci, the previous chief creative.

Citigroup analyst Thomas Chauvet said the latest plan had a “better balance of product categories, channels and stronger brand differentiation” than the previous plan, which had very similar financial goals.

If realized, sales would be 30% higher than current expectations and profits 15% higher in the year to March 2027, he added.

Burberry shares were little changed in early London trade.

Results for the six months to 1 October showed sales rose 5% at constant exchange rates to 1.35 billion pounds, while adjusted operating profit rose 6% to 238 million pounds, slightly above expectations. The reported increase was higher due to a stronger dollar.

The headline figures belie significant changes in who is spending and where. “Tourists make up 40% of our [European] business in the second quarter. . . but the bulk of the tourists coming into the region now are from the United States and the Middle East,” Brown said.

Meanwhile, sales in the Americas were sluggish – down 3% in the first half, as strong sales of higher-priced items such as leather goods were offset by competitive pressure from cheaper goods.

Chinese consumers who used to shop in Europe and other parts of Asia are now buying almost entirely in their own country because of Covid restrictions, she added.

Burberry maintained the short-term financial guidance set by Gobbetti in May 2021, which foresees high-single-digit annual sales growth and improved margins through March 2024.

Brown said it would retain its desire to increase operating margins to 20% by 2024, “but our aim is to further strengthen that as we move into the next phase”. The company has long averaged lower profit margins than many of its European luxury peers.

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