Burberry bags a 40% profit rise

The label has seen its profits jump after focusing on its retail stores. So at least one thing's going right on the high street.

by Emma Haslett
Last Updated: 06 Nov 2012
Burberry’s distinctive check might have been voted the  ‘worst fashion faux pas’ of the past 50 years by Sun readers in 2008 – but if the fashion house’s latest figures are anything to go by, it’s firmly back in. Burberry’s pre-tax profits rose by 40% to £296m in the year to the end of March, with revenues up by more than a quarter to £1.5bn.

Sales of Burberry's famous camel-coloured macs rose by almost a third, as a result of which ‘outerwear’ made up more than half of its clothing sales. But the real star performer was ‘non-apparel’ (i.e. handbags and accessories), with like-for-like sales at its own stores rising by 11%. Not bad, considering those raincoats retail at about £1,000, while its top-end handbags go for a cool £1,500 (and upwards).

Since that Sun poll (plus various other chav-tastic PR nightmares), Burberry has been concentrating on taking control of its image by opening its own shops, and moving away from department stores. It’s worked so well that the brand is planning to open up to 25 new stores this year, increasing its retail space by between 12% and 13% this year (after a 9% increase last year).

One of the ‘flagship’ cities in which it wants to increase its visibility is London; it's planning to double its presence here in the Big Smoke. But the real focus will be on emerging markets like China, Latin America and the Middle East, where its performance has been particularly impressive. Having bought its Chinese stores back from a franchisee last year, it apparently had a ‘blockbuster’ increase in like-for-like sales in the country (although those figures aren’t included here).

So why are things going so well for Burberry, when the rest of the high street is suffering? Well, it's largely because of its well-heeled clientele; the rich tend to suffer less in a downturn than the rest of the hoi polloi – and if they do, they forego new yachts, rather than new clothes, which mean high-end brands don’t tend to be hit as badly. And the other end of the scale, some customers who might usually buy five or six dresses at TopShop are opting to save up for something high-quality that will last them.

But it's clearly not all grim on the high street. Reports suggests that Superdry is in advanced talks to take over Austin Reed's famous five-storey Regent Street premises - so out will go the suits and sensible work clothes, and in will come hoodies, cargo shorts and other assorted Urban Styles. Apparently, Superdry (or Supergroup, to give it its proper name) may fork out £12m to take over the lease, which is thought to cost £2.5m a year. It’ll have to sell an awful lot of distressed jeans to cover that…

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