British luxury brand Burberry (BRBY.L) on Tuesday reported a pick-up in first quarter sales after it began shifting more new designs by creative chief Riccardo Tisci into its stores as part of a turnaround plan.
The fashion label is more than a year into a high stakes overhaul by CEO Marco Gobbetti aimed at taking Burberry more upmarket and reviving its image, including with edgier takes by Tisci on some of its classic products like the trench coat.
The brand said new products had accounted for around half the wares on offer in its shops by the end of June, more than some analysts had expected.
This helped lift same store sales by 4% – following lacklustre growth of 1% in the previous three months and topping market expectations of around 2% – and its gamble on a new designer appeared to be paying off for now.
“The consumer response was very promising, delivering strong growth in our new collections,” Gobbetti said in a statement.
Burberry has in recent quarters lagged the performance of luxury industry leaders like LVMH’s Louis Vuitton (LVMH.PA) or Kering’s (PRTP.PA) Gucci, which benefited from thriving demand in China in spite of U.S. trade tensions.
Those firms are due to post sales for the April to June quarter next week.
The pace of Burberry’s revenue growth within China and more broadly across Asia also improved slightly, despite slowing Chinese economic growth.
Its revamp has included rolling out a new logo-style print, or monogram, it hopes will catch on as it works on extending its reach in high-margin handbags; and it is redesigning stores as well as making a big marketing push with social media campaigns.
The company maintained its forecast for broadly stable revenue and operating margin at constant exchange rates for the 2020 financial year. Revenue and operating profit are not expected to pick up in a more meaningful way until 2021.
Reporting Sarah White, editing by Louise Heavens and Kate Holton
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