Burberry last week reported third quarter retail revenue dropped 2% to £719 million (about $990 million) from the year-ago period, disappointing analysts cited by the Associated Press, including those at Hargreaves Lansdown, who said the report "looks a bit drab" especially in light of the 7% sales increase at rival Hugo Boss the same week.
Same-store sales in the period overall rose 2%. By geography, same-store sales in the Asia Pacific region and in mainland China each grew by a mid-single digit percentage; in Europe, Middle East, India and Africa they declined by a low single digit percentage, impacted by strong U.K. comparatives, and in the Americas grew by a low single digit percentage, with U.S. revenue broadly flat, according to a company press release.
The company is piloting a new in-store digital sales associate tool with the ability to search items by image or bar code and to track inventory across the global distribution network, according to a conference call transcript from Seeking Alpha. The company is also in discussions with U.S. and European wholesale accounts around the location and presentation in points of sale, executives told analysts. The company is also "deepening relationships with digital third parties."
Late last year, after Christopher Bailey (who’d held the dual role as CEO and chief creative officer in 2014 but stepped away as CEO in 2016) announced his departure, CEO Marco Gobbetti announced a turnaround plan.
At the center of the revamp are simplified ranges and more luxury leather goods and accessories to attract new customers. Burberry also promised to be "bold" in engaging with luxury customers, relying on its digital reach, which brand intelligence firm L2 has consistently ranked among the most effective of luxury brands.
Gobbetti in November asked for patience, saying that the effort would require changes to product, communications and customer experience and would take time and resources. The retailer then warned that the effort could prevent sales growth until 2021.
Last week’s report suggested how much patience that will entail. The company maintained its guidance for fiscal year 2018, with its outlook for operating profit unchanged. The company also said it is "on track to deliver cumulative cost savings of £60 million" in the period.
Last week, COO and Financial Officer Julie Brown told analysts there are two phases to Burberry’s transformation and the company is working to "build the foundation before accelerating and growing, and we’re right at the beginning of this multiyear journey," according to Seeking Alpha’s transcript.