Chinese Covid restrictions weigh on Burberry sales

Around a third of the global luxury industry was based on Chinese spending before the pandemic.

Burberry said its performance in China has been encouraging since shops reopened in June. (Yui Mok/PA) (PA Wire)

Continued Covid-19 restrictions in China have held retailer Burberry back from truly rebounding from the pandemic, the company’s latest figures show.

The fashion brand said first-quarter sales dipped 35% in the country – a vital market for its clothes.

Before the pandemic, around a third of the global luxury industry relied on the spending of Chinese buyers, both at home and as tourists abroad.

So the continued restrictions in the country took a big chunk out of Burberry’s performance.

While the current macroeconomic environment creates some near-term uncertainty, we are confident we can build on our platform for growth

Jonathan Akeroyd, Burberry

Excluding China, sales were up 16% globally, but when it is included they only rose by 1%.

But there appears to be a brighter future – since stores reopened in China in June the company said its performance there has been “encouraging”.

“Our performance in the quarter continued to be impacted by lockdowns in mainland China but I was pleased to see our more localised approach drive recovery in EMEIA (Europe, the Middle East, India and Africa), where spending by local clients was above pre-pandemic levels,” said chief executive Jonathan Akeroyd.

“Our focus categories, leather goods and outerwear continued to perform well outside of mainland China and our programme of brand activations boosted customer engagement.

“While the current macroeconomic environment creates some near-term uncertainty, we are confident we can build on our platform for growth.”

The luxury company said little about the cost-of-living crisis, with bosses simply saying that they are “actively managing the headwind from inflation”.

The business said that sales in EMEIA grew 47% when compared with the lockdown-hit first quarter of last year.

Sales to American tourists rebounded in the region, it added.

Sales in the Americas themselves dropped 4% when compared against a strong performance this time last year. Outerwear and bags did well here, Burberry added.

Overall, outside its mainland China market the Lola handbag range performed well as Burberry released it in new shapes.

The company’s rainwear and jackets were also standout performers.