Blog: Leonie BarrieThe going gets tough for Burberry and H&M

Leonie Barrie | 16 July 2008

Even though they sit at opposite ends of the sales spectrum, Burberry and H&M have both topped market expectations with their latest results. In the case of luxury label Burberry, first quarter revenues jumped 26% to GBP211m, while cheap chic purveyor H&M saw its June sales rise by 8%.

On the face of it, these numbers seem to fly in the face of the retail slowdown, as exemplified by the latest figures from the British Retail Consortium which yesterday said UK clothing and footwear sales fell sharply in June as changeable weather and falling household budgets stifled demand.

So why is there such a disparity, and are both companies really doing as well as they seem? Well the underlying picture at both Burberry and H&M undoubtedly mirrors a tougher retail environment and volatile consumer demand.

Burberry’s results were held up by strong demand for its lightweight trench coats and accessories, particularly in the US, most of Europe and Asia. But there are also concerns that its sales were lifted by earlier wholesale deliveries of its autumn and winter lines – and that this will even out in the coming months. Stripping out sales from newly stores, its retail revenue was up by just 4.5%.

Sweden’s H&M, meanwhile, said turnover in its stores open a year or more was down 2% year-on-year. But this result beat market expectations and the sentiment seems to be that its low prices are a definite boon in the current retail climate.


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