Luxury fashion group Burberry has said it will ramp up the rollout of new stores targeted at higher-spending customers as it revealed surging profits after sales recovered from the pandemic.
The firm reported pre-tax profits of £191 million for the six months to September 25, up from £73 million a year ago.
It saw comparable store sales in the first half return to levels seen before the pandemic struck, up 1% on a two-year basis and with full-price sales up 18%.
When compared with last year’s pandemic-hit first half, same-store sales jumped 37% after a 90% hike in the first quarter and 6% rise in the following three months.
But shares dropped 8% as it revealed recent trading woes in China and an ongoing hit from lower tourism in many regions.
Burberry – which last week named Gianni Versace boss Jonathan Akeroyd as its new chief executive – said it was accelerating refurbishments of flagship stores to its new format as it looks to attract high-spending shoppers.
The group now has 15 of these new stores currently and is looking to expand this to 50 by the end of the financial year.
It said the rollout of the new stores was “progressing well”.
“These stores are resonating very well with our customers, attracting high-spending clientele,” said Burberry.
The second-quarter figures showed the impact in August of re-imposed Covid-19 restrictions in China, though September saw a marked recovery.
Burberry said: “Mainland China was up over 40% even as wide-reaching regional lockdowns and extreme weather impacted our performance in August in particular.”
It said that sales were still below pre-pandemic levels across the Europe, Middle East, India and Africa region – including the UK – as tourist trade continues to be impacted.
It said around 50% of annual sales in the region typically come from tourists, with London in particular having been knocked by travel restrictions in the pandemic.
Sales in the region were still 25% below on a two-year basis across the second quarter, although this is better than the 38% fall in the previous three months.
“Encouragingly, local customers were positive across the major territories with the region seeing a sequential improvement quarter-on-quarter,” according to Burberry.
The group recently announced Mr Akeroyd will take the helm on April 1 next year to replace outgoing boss Marco Gobbetti, who in June announced unexpected plans to quit after nearly five years in the role.
Mr Gobbetti leaves at the end of the year to head up Italian rival Salvatore Ferragamo, with chairman Gerry Murphy leading Burberry on an interim basis until Mr Akeroyd joins.
Freetrade analyst Gemma Boothroyd said: “By the skin of its teeth, Burberry’s managed to get back to its pre-pandemic levels.”
She added: “Investors will be waiting to see whether Burberry’s next set of earnings can give meek European revenues a boost.
“If not, there’s a big weight on Akeroyd’s shoulders to get the British brand booming at home again.”