Weak Holiday Sales Weren't a Problem for Burberry

The U.K.'s quintessential luxury brand saw a 22 percent lift for its third quarter.
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Photo: Christian Vierig/Getty Images

Photo: Christian Vierig/Getty Images

On Wednesday, WWD reported a financial statistic you probably could've predicted: that luxury sales in the U.S. took an ugly nosedive during the holiday season. Retail, as we know it, is struggling, with department stores and fashion houses alike going to great lengths to get shoppers — millennials, especially — in the door. According to MasterCard, there was a 12.9 percent dip in the domestic luxury business in November and December. 

But Burberry — albeit based in the U.K., though by no means exempt from the current plight of retail — was an exception, and a huge one, walking away with a fiscally successful third quarter. In the three months ending on Dec. 31, 2016, the company reported its net sales increased 22 percent to £735 million (roughly $911.4 million), a £131 million boost compared to the same period last year.

So, what was in Burberry's special sauce? WWD suggested the weakened pound, which, in October, hit a 31-year low. These types of currency swings often benefit foreign shoppers, who are able to spend less to buy the same goods in the U.K. They also benefit U.K.-based exporters, who can increase their profit margins. 

In an earnings report released on Wednesday, Burberry said clothing and accessories — bags, particularly — outperformed other categories, and that demand for some fashion items even exceeded supply. Customers reportedly responded strongly to its "festive assortment," the campaign for which was directed by Asif Kapadia, the Oscar-winning director of "Amy," and starred Sienna Miller, Lily James and Domhnall Gleeson.

E-commerce also did well, outperforming in all regions, thanks to an emphasis on mobile. Though Gucci surpassed Burberry this past November as the most digitally savvy luxury brand, the latter delivered with strong e-commerce traffic, in addition to the launch of new payment methods. 

In the prior quarter, Burberry reported that its first-ever entirely "see now, buy now" runway show didn't have a sizable impact on sales, but now that the pound has weakened, that could change. We'll know more following its fall 2017 presentation next month. 

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