Burberry has swung to a pre-tax profit of £19m in the six months to 26 September, after a loss of £48m a year earlier, as sales rose 15% in China and 14% in the Americas, driven by a strategy of offering affordable luxury items alongside high-end products.
Under the strategy, Burberry focuses on a range of prices, from cotton-cashmere socks starting at £85 to top-tier bags and coats that can cost more than £9,000 for a leather version.
Chief executive Joshua Schulman said the approach was resonating with Chinese customers. “Our strategy is working,” he said. He added that “luxury customers around the world are experiencing some fatigue with exorbitant pricing.”
Schulman said history suggested the business was “very cyclical”.
Group sales rose to £1.1bn in the six-month period.
Analysis
Why This Matters
- Burberry's return to profit shows that a strategy of offering products at a range of price points can succeed in a challenging luxury market.
- Strong sales growth in China and the Americas highlights resilient demand in these key regions.
- The company's performance may set a precedent for other luxury brands considering similar pricing strategies.
Background
Burberry, the British luxury fashion house, had reported a loss of £48m in the same period last year. Under CEO Joshua Schulman, the company has focused on a strategy of affordable luxury, offering items from £85 socks to £9,000 bags. This approach aims to attract both high-end shoppers and those seeking more accessible luxury items.
What to Watch
- Burberry's next earnings report to see if sales momentum continues, especially in China.
- How competitors in the luxury sector respond to Burberry's pricing strategy.
- The impact of economic cycles on luxury demand, as noted by Schulman.
Checked
10 claims in this story checked against 1 source: 10 supported.
Show each claim
- SupportedBurberry returned to pre-tax profit.World news | The Guardian: “Burberry said it made a pre-tax profit of £19m in the six months to 26 September after a loss of £48m a year before”
- SupportedSales “soar” in the headline.World news | The Guardian: “Burberry returns to profit as sales soar, from £85 socks to £9,000 coats.”
- SupportedThe price range includes cotton-cashmere socks from £85 and top-tier bags that can cost more than £9,000 for a leather version.World news | The Guardian: “Burberry’s focus on a “pyramid of pricing” ranging from more “affordable” scarves, starting from £195, and cotton-cashmere socks from £85, to its top-tier bags and coats, which can cost more than £9,000 for a leather version”
- SupportedBurberry made a pre-tax profit of £19m in the six months to 26 September, after a £48m loss a year earlier.World news | The Guardian: “Burberry said it made a pre-tax profit of £19m in the six months to 26 September after a loss of £48m a year before”
- SupportedSales rose 15% in China and 14% in the Americas.World news | The Guardian: “Sales rose 15% in China and 14% in the Americas”
- SupportedThe growth was driven by a strategy offering affordable items alongside high-end products.World news | The Guardian: “Burberry’s focus on a “pyramid of pricing” ranging from more “affordable” scarves, starting from £195, and cotton-cashmere socks from £85, to its top-tier bags and coats, which can cost more than £9,000 for a leather version, had helped it achieve growth despite a tough market.”
- SupportedJoshua Schulman said, “Our strategy is working.”World news | The Guardian: ““Our strategy is working,” he said.”
- SupportedSchulman said luxury customers around the world were experiencing fatigue with exorbitant pricing.World news | The Guardian: ““Luxury customers around the world are experiencing some fatigue with exorbitant pricing and in this context our strategy of having great value for money is resonating strongly with Chinese customers.””
- SupportedSchulman said history suggested the business was “very cyclical”.World news | The Guardian: “Schulman said that while “nobody has a crystal ball” about whether customers would begin spending more freely, history suggested “this is a very cyclical business”.”
- SupportedGroup sales rose to £1.1bn in the six-month period.World news | The Guardian: “as sales rose to £1.1bn.”