Burberry praises increased marketing investment for festive sales bump

Burberry has credited an increased investment in marketing and digital innovation for a sales lift over the festive period.

Video: The Burberry Brit Rhythm marketing campaign was said to have had a ‘halo effect’ on other products over the festive period

Retail revenue in the three months to 31 December increased 14 per cent year on year to £528m, while comparable sales were up 12 per cent.

Burberry highlighted the global Brit Rhythm marketing campaign launched in September to support its biggest fragrance launch to date as having a “halo effect” on Burberry Brit outerwear apparel in the period. Overall, outerwear and large leather goods contributed about half of the sales growth.

Speaking on a call with analysts today (15 January), Burberry CFO Carol Fairweather said Burberry is increasing its marketing spend because it now has more money available after bringing its beauty business in-house. She added that Burberry has already switched a “large percentage” of its marketing into digital and that the firm now thinks the balance is “about right”, although it will keep that under review.

“We are pleased to have the combined marketing pot of fashion and beauty available to us. We have exciting plans for retail, digital, marketing and beauty this year,” she said.

The company said digital “outperformed” in the quarter, driven by investments in online services – such as adding additional languages to its sites and apps – the introduction of click and collect and an increased focus on fulfilment. Fairweather said click and collect now accounts for around 15 per cent of online sales, with the service helping to drive sales.

Once again, Burberry’s operations in the Asia Pacific region marked double-digital comparable sales growth, led by China and improvements in Korea. The company said UK performance was “robust”, likely helped by the opening of the first “Burberry Beauty Box” store in Covent Garden, London.

Angela Ahrendts, Burberry chief executive officer, says: “This performance reflects continuing strong brand momentum and our team’s intense focus on retail execution, supported by a planned increase in investment in marketing, customer service offline and online and our retail portfolio.”

The company did warn, however, that a stronger British Pound means exchange rates will pose a “significant headwind” in the second half and beyond.

Ahrendts is set to leave Burberry for Apple in the spring, taking up the newly created role of senior vice president of retail and online stores. Burberry’s chief creative officer Christopher Bailey will replace her as CEO.