Burberry Busts Profit Predictions

With many sectors of the global economy, including retail, still trying to fully recover from the collapse of the financial markets it is a rare sight these days to see any designer, fashion house or line outperform its economic predictions. Which is why Burberry’s recently implemented growth strategy must be praised, after the luxury retailer announced this week that it surpassed its own predicted first quarter revenue by a jaw dropping 34%. It seems that fashonistas the world over cannot get enough of the brands iconic trench coats and hand bags with the most staggering gains coming in the Asia Pacific region where the company announced a 67% increase in profits as compare to the previous fiscal year.

It seems that European style is very in vogue in Asia these days, particularly in China where Burberry just spent around $100 million to launch 50 luxury retail operations throughout China’s most populated urban areas. The company also pointed to Chinese tourists as a growing section of the European market.

Burberry has also implemented a new model for production and distribution that marks a dramatic break from the business as usual seasonal system the fashion world has lived and died by for the past half century. The brand has begun expanding on successful designs mid-season, eschewing the traditional approach of adding new variations on popular styles to the next season’s collection in favor of getting the designs in stores when they are still in demand. Many predicted that this would cause problems for Burberry when they announced this new technique as part of their growth strategy for the coming fiscal years, and it certainly can’t make the jobs of their suppliers or production facilities any easier, but considering the first quarter numbers the luxury retail has put up it definitely seems to be working.

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