Burberry sales in China pick up to pass pre-Covid levels

Luxury group Burberry has brushed off controversy over cotton sourcing in China to report a 55 per cent sales rise in one of its most important markets and shoot past pre-pandemic levels.

The UK-based retailer faced a backlash in China after an international boycott of cotton farmed in Xinjiang province amid concerns of human rights abuses, which many western retailers soon sought to distance themselves from. Burberry depends on sales from the mainland as coronavirus-induced travel restrictions have kept the Chinese middle class at home.

Burberry said on Friday its activities in China had shown “relatively little impact” from the controversy, which prompted a brand ambassador to quit the retailer and a video game to take a stand against it. “We’ve just reported a 55 per cent increase in full-price sales there, driven by new younger customers discovering the brand,” chief financial officer Julie Brown said.

However, sales in Europe and the UK declined “more than 40 per cent” in the first quarter, partly because of a lack of tourists because of the pandemic. In regions where many wealthy tourists come from, such as Russia and the Middle East, they rose by “double-digit amounts”, the London-listed group said on Friday.

Group sales, however, picked up to match pre-pandemic levels, rising 90 per cent to £475m in the 13 weeks ending June 26 compared with the same period last year, when the Covid-19 crisis struck.

“We have seen strong recovery in [the first quarter] with comparable store sales now in line with pre-Covid-19 trading despite a continuing challenging environment,” Burberry said, referring to the lack of international travel.

Chief executive Marco Gobbetti said last month he would be leaving the company after five years to join its Italian rival Salvatore Ferragamo, prompting investors to worry that his efforts to bring youth and glamour to the brand will lose momentum.

Recent success on that front has included a marketing campaign with social media celebrity Kendall Jenner, who helped promote Burberry’s Olympia bag to a younger audience.