Photo/Zhang Jian

Following Gucci's plunge in sales, another major international luxury brand is facing a "hard-to-sell" predicament.

On May 15, British luxury group Burberry announced its financial results for the fiscal year 2024 ending March 30. Revenue fell 4% to £2.968 billion (approximately RMB 27.1 billion), adjusted operating profit fell 34% year-on-year to £418 million (approximately RMB 3.8 billion), and gross profit fell 8% year-on-year to £2 billion (approximately RMB 18.3 billion), with a gross profit margin of 67.7%.

Looking ahead, by accelerating the reduction of distribution channels, Burberry expects wholesale revenue to decrease by approximately 25% year-on-year in the first half of this fiscal year, and hopes that the performance in the second half of the fiscal year will improve. At the same time, based on the exchange rate as of April 25, 2024, Burberry expects revenue to decrease by £30 million and adjusted operating profit to decrease by £20 million in fiscal year 2025.

NBD noticed that Burberry's sales performance in the Asia-Pacific market has further declined. In the fourth quarter of fiscal year 2024, overall same-store sales fell 17% year-on-year, among which this figure in the mainland China market fell 19% year-on-year.

This luxury brand, born in 1856, has long been a household name on the world fashion stage. The Burberry trench coat, with its British style, is considered the "ceiling" of the trench coat world and has been sold for a century. NBD learned from interviews that the brand's sales in outlets are very popular. But on the other hand, many people in the second-hand luxury goods industry told the NBD bluntly: In recent years, Burberry's value retention rate has continued to decline. According to Zhou Ting, an expert in the luxury goods industry, the current second-hand price of Burberry is basically 10% to 30% off.

As of the close on May 15, Burberry's share price has fallen by about half compared to a year ago. How can Burberry stabilize the Chinese market?

"The decline in brand image is the main reason why Burberry's performance is poor and the capital market is not optimistic about it." Zhou Ting, an expert in the luxury goods industry, told NBD in an interview. In fact, Burberry is one of the most recognized luxury brands among Chinese consumers. The clothing market it is in has a higher frequency of consumption than the handbag market where many brands are in. However, many of Burberry's strategies have "popularized" the brand. She further cited examples: "The prevalence of counterfeits, the high market visibility, and the enthusiasm for discount channels have all to some extent pulled down Burberry's image."

In Zhou Ting's view, once the brand image of a luxury product comes down, it is no longer high-end; and the market visibility is too high, it is not mysterious; in addition, Burberry is too old-fashioned, which has led to the core consumers beginning to abandon Burberry.

Many experts have said that "having classics but no blockbusters" is the main problem facing Burberry at present.

"Burberry currently does not have the brand power of a top luxury brand." Zhou Ting analyzed to NBD that "If Burberry can start from now to adhere to high-end development, strengthen product innovation capabilities, and fully utilize its digital advantages, it still has the opportunity to become one of the most popular international luxury brands among Chinese consumers."