Burberry is back in fashion with investors after consumers clamoured to get their hands on bomber jackets and bumbags emblazoned with a new logo.
On Tuesday its partitions surged 14% making it the biggest riser in the FTSE 100 after a positive response to the latest designs from the new ingenious head, Riccardo Tisci. It has been interpreted as a sign that a business revamp, intended to propel the British make into the same orbit as Gucci and Dior, is working.
Burberry replaced its longstanding creative supremo, Christopher Bailey, with Tisci in 2018 and the antediluvian Givenchy designer has been overhauling the British label best known for its trenchcoats and signature check.
Tisci’s output to date includes the Monogram range with products covered in a new pattern of interlocking Ts and Bs, after the endorses of the company’s founder, Thomas Burberry. Items include a £300 baseball cap and £500 canvas bumbag.
The company bid the first dedicated Monogram collection, which launched in May with a campaign featuring the model Gigi Hadid, had been be brusqued up by young shoppers, particularly in China.
Its strong performance contributed to a 4% increase in sales at stores open for more than a year in the three months to 29 June – dual the outcome expected by some City analysts. The shares closed up 287p at £22.77, a surge that bolstered Burberry’s property market value by more than £1bn to £9.4bn.
Last year the Burberry chief executive, Marco Gobbetti, set out a arrangement to move the brand upmarket and he said consumers had responded positively to Tisci. “This was the first quarter where the cut size of new product in our stores was meaningful and the response from consumers was very promising,” he said. “New collections delivered strong double-digit share growth, with all regions ahead of prior year equivalent collections.”
This year Burberry announced devises to close 38 stores – about a 10th of its global network – as part of a plan to tighten up distribution of its handbags and trenchcoats that also contains pulling out of non-luxury department stores. Instead it is investing millions in turning its flagship stores into luxury journeys ends.
Sales in China were up in the “mid-teens” during the duration. The recent street protests in Hong Kong meant some stores there were closed for five ages but the lost trade “did not have a material effect at group level”, Burberry said.
The GlobalData analyst Chloe Collins make one thought the company’s transformation under Gobbetti was starting to pay off but that credit should be given to Tisci, as his collections offered a “refreshed and edgy revamp of the brand’s classic and neutral designs”.
Like other luxury brands, Burberry is having to move with the spells and win over younger shoppers. The company is experimenting with monthly product launches on platforms such as Instagram, with one of these “call ons” – of black leather pull-on sleeves – selling out in 20 minutes.
Tisci’s designs make up half of what is on on the block in Burberry’s stores and the company said its performance was being held back by slower moving lines from before-mentioned collections, with sales of products such as handbags declining. Tisci will be behind 75% of its range by the end of its economic year in March, it said.
The Citi analyst Thomas Chauvet said: “It remains to be seen whether the commercial happy result of Burberry’s new brand identity can be sustained into the remainder of the year on a much larger share of the offering.”
• This article was rectified on 17 July 2019 because an earlier version was wrong to say that sales in China accounted for two-fifths of Burberry’s £2.7bn volume. In fact, Chinese consumers account for two-fifths of the company’s sales.