Burberry’s latest update shows how dependent it is on the tourist trade. It needs wealthy people to be travelling to different countries and shopping as part of their itinerary. Its stores are often key destinations and picking up some of its chequered products has become second nature for many wealthier individuals.
Travel restrictions imposed as part of lockdown measures in various parts of the world are hurting its sales, particularly in the broader EMEIA region which covers Europe, the Middle East, India and Africa.
Unfortunately turning the travel taps back on won’t be an instant solution for one of its key regions. The end of VAT refunds for non-EU tourists is going to have a negative impact on UK sales and so Burberry needs to find a way of making its UK stores and product pricing more attractive.
“Against these challenges, there are plenty of reasons for Burberry to be looking smart. It is seeing decent growth in full priced items and is picking up a new generation of customers with younger clientele helping to drive sales as well as repeat business from existing customers,” AJ Bell said.
“Online sales growth is also very impressive, particularly in mainland China. Furthermore, it has struck gold with signing up footballer Marcus Rashford to a recent marketing campaign. He is seen as a hero to people across the UK for his role in fighting child food poverty. Naturally his association with the brand will have placed Burberry in a favourable light with a lot of people.”