Burberry seeks to double online sales and raises overall target to £5bn

Burberry’s chief executive aims to raise annual revenue at the UK luxury goods group to £5bn by increasing sales of leather goods, shoes and other accessories and doubling ecommerce revenue.

Jonathan Akeroyd, who took over from Marco Gobbetti this year, said that “in the medium term” revenue should hit £4bn a year, with sales of leather goods, shoes, women’s ready-to-wear and outerwear increasing 50 per cent. Chief financial officer Julie Brown said “medium term” meant within three to five years.

Accessories should account for more than half of group sales “in the long term”, Akeroyd added, with overall revenue reaching £5bn. Burberry will refocus on its quintessential Britishness. Akeroyd has recruited Daniel Lee, a British designer, to replace the previous chief creative Riccardo Tisci.

Citigroup analyst Thomas Chauvet said the latest plan had “a better balance in terms of product categories, channels and a stronger brand differentiation” than the previous one, which had fairly similar financial targets.

He added that if achieved, it would generate up to 30 per cent higher sales in the year to March 2027 than currently expected, and 15 per cent higher profits.

Burberry shares were little changed in early London trade.

Results for the six months to October 1 showed sales up 5 per cent at constant exchange rates to £1.35bn and adjusted operating profit of £238mn, up 6 per cent, slightly ahead of expectations. Reported increases were higher because of the stronger dollar.

The headline numbers masked significant changes in who is spending and where. “Tourists were 40 per cent of our [European] business in the second quarter . . . but the big tourist arrivals into that area are now from the US and the Middle East,” Brown said.

Meanwhile, sales in the Americas were sluggish — down 3 per cent in the first half, with strong sales of higher-price items such as leather goods offset by competitive pressure for cheaper goods.

She added that Chinese consumers, who used to spend on shopping trips to Europe and other parts of Asia, now almost exclusively bought in their own country because of Covid restrictions.

Burberry maintained the short-term financial guidance put in place by Gobbetti in May 2021, which predicted high single-digit growth each year in sales and improving margins through to March 2024.

Brown said the aspiration to increase operating margin to 20 per cent by 2024 would be retained “but we aim to strengthen that further as we go into the next phase”. The company has long had lower average margins than many of its European luxury peers.