Mixed fortunes at fashion chains Burberry and Ted Baker

Sales of personal luxury goods may not recover fully in Europe until 2024, says Bain

Fashion chains Ted Baker and Burberry experienced mixed fortunes over the first half of the year.

Ted Baker reported higher sales and a smaller loss on Thursday, as it navigates a bumpy recovery from the pandemic.

Meanwhile, over at Burberry, sales flatlined in the second quarter due to bad weather and Covid-19 travel restrictions in China, taking the shine off the fashion brand’s better-than-expected profit.

Shares in the company fell as much as 10 per cent in early Thursday trading, giving up the gains they have made since mid-October after it reported flat like-for-like second-quarter store sales compared with two years ago, before the pandemic struck. They later pared some of their losses to trade down 5 per cent at 1,862.5 pence.

China is Burberry’s biggest market, and growth in the country, along with South Korea and the United States drove its revenue to pre-pandemic levels in the first half of its financial year.

Trading in Burberry's home market and elsewhere in Europe "remained difficult" due to low tourism, chief financial officer Julie Brown said, with first-half sales down 31 per cent from two years ago.

Sales of personal luxury goods may not return to pre-Covid levels in Europe until 2024, consultancy Bain said on Thursday.

Burberry, which recently poached Versace boss Jonathan Akeroyd to be its new chief executive, reported revenue of £1.21 billion (€1.16 billion) for the six months to September 25th, up 45 per cent at constant exchange rates. Adjusted operating profit came in at £196 million, nearly four times the level achieved a year ago and beating expectations.

Chairman Gerry Murphy said Burberry remained confident of achieving its medium-term goals of high single-digit top line growth and margin improvement.

The company, known for its camel, black and red check and new “TB” monogram, said full-price sales almost doubled in the Americas, while South Korea grew almost 80 per cent, and mainland China was up over 40 per cent.

Ted Baker

At Ted Baker, demand for formal and occasion wear pushed group revenues up nearly 18 per cent year over year in the 28 weeks to August 14th, the company said, as rising vaccinations in Europe and the US drove many back to offices.

"Occasionwear has seen a strong pick-up across men's and women's collections," chief executive Rachel Osborne said in a statement, adding that sales of formal wear and suiting had also risen.

Ms Osborne has been steering the upmarket retailer through a three-year turnaround strategy focused on cost cuts, refreshing its product range and boosting its online presence.

Group revenues were, however, still down 36 per cent compared to pre-pandemic levels in 2019. Ted Baker said the pace of the recovery had been uneven as the pandemic continues to affect footfall at retail stores.

The company did not provide annual financial forecasts but said it was “comfortable” with analyst expectations for the current financial year. – Reuters