Is Burberry’s turnaround strong enough to outrun a tough luxury market? This is Fashion Business Daily. Why the nerves around Korea’s department stores—and what could Italy’s funding mean for the people making the clothes? First, Burberry. Let’s see how much confidence those sales deserve.
FashionNetwork, with Sandra Halliday:
In the 26 weeks to late September revenue increased 6% on both a reported and constant exchange rate (CER) basis to £1.098 billion. As mentioned comparable retail sales grew 4% having been flat this time last year. Adjusted operating profit rose 225% to £62 million and the adjusted operating margin jumped from 1.9% to 5.7%. Reported operating profit was £54 million, a sharp swing from an £18 million loss a year earlier.
Burberry getting growth from both the US and China gives this recovery some credibility. FashionNetwork also points to younger shoppers coming back. That's a better endorsement than another campaign telling you how British the trench coat is. And there's profit behind it. Burberry reported first-half adjusted operating margin of 5.7%, up from 1.9%; reported operating profit swung from an £18 million loss to a £54 million profit. Those are company figures. Exactly—I'll give them credit for getting shoppers back while improving the margin. But Europe and the wider EMEIA region still need convincing: comparable sales there fell 2% in the second quarter. And keep the beat in proportion. Company-reported second-quarter comps rose 4%, against analysts' estimated 3%—but growth eased from 5% in the first quarter. A stronger business, yes; an accelerating recovery would be harder to argue.
Seoul Economic Daily, with Kang Dong-heon:
The company said on the 10th that consolidated operating profit came to 5.1 billion won ($3.5 million) in the third quarter, swinging from a loss a year earlier. That marks a 9.4 billion won improvement from the same period last year. Revenue rose 16.6% to 299.5 billion won ($205 million), the third consecutive quarter of double-digit growth.
Enfants Riches Déprimés and Vuori both more than doubled revenue at Shinsegae International. Quite the wardrobe split. Rick Owens and Dries Van Noten grew too—there's more going on here than an activewear bounce. And it reached the operating line. Per Seoul Economic Daily, Shinsegae reported third-quarter operating profit of 5.1 billion won on revenue of 299.5 billion, up 16.6%. That puts the operating margin at roughly 1.7%, by my calculation—profitable, with a thin cushion. Thin, yes—but overseas fashion revenue rose 27.9%, and cosmetics grew 15.9%. I'd give that breadth some credit. The appeal stretches from those designer labels to beauty. Credit earned: three consecutive quarters of double-digit revenue growth, and domestic fashion margins improved too. Keep the celebration proportional to that 1.7% margin.
Edaily, with Han Jeon-jin:
Although the department store industry posted significant profit growth in the third quarter, concerns about reaching a peak are mounting. The growth rate of luxury goods sales—which drove earnings—has slowed compared to the first half of the year, and signs of a slowdown are already emerging in the fourth quarter.
Korea’s department stores posted strong profit growth, but the pace dropped sharply. Edaily’s account of company-reported results puts Lotte’s department-store operating profit growth at 35.7 percent in Q3, down from 84 percent in Q2. Thirty-five percent still sounds pretty good. But Edaily says luxury sales growth has gone from the forty-percent range to the teens. That’s a much colder backdrop for the next expensive bag. And Lotte has company: Shinsegae’s department-store profit growth slowed to 23.5 percent; Hyundai’s to 27.8 percent. Slower growth still means higher profit—calling the peak from these numbers alone would be premature. Sure. But Edaily’s question about foreign shoppers matters: how much domestic cooling can they cover? I’d want to see whether those shoppers keep buying at department-store prices when duty-free is competing for the same purchase.
Sustainability Directory writes:
Italy’s Ministry of Enterprises and Made in Italy has launched a new €100 million incentive scheme to support small and medium-sized enterprises across the textile, clothing, and leather supply chains. This public funding initiative assists local manufacturers in transitioning toward localized, digitalized, and highly traceable production methods, directly reinforcing the sustainability of Italian-made garments.
Italy’s putting money behind the workshops: Sustainability Directory reports a €100 million fund for small textile, clothing and leather suppliers. Traceability equipment is a much better use of cash than another campaign about how lovingly a bag was made. The reported terms matter: eligible projects can get up to 75 percent of their investment covered, including collaborations between companies. That’s a ceiling, not a blanket reimbursement—and €100 million is the scheme’s size, not money already spent. The collaboration bit could help. Small leather suppliers sharing an upgrade sounds more useful than each workshop trying to build its own digital paperwork department. Though I’d like the luxury houses buying from them to carry some of that bill. And I’d separate traceability from the sustainability claim. These grants support digital and green upgrades; tracking a hide doesn’t, by itself, establish better working conditions or lower emissions. Follow the investment with measured results.
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Links to every story are in the show notes, so you can follow up on whichever developments caught your attention. That’s Fashion Business Daily for today. We’ll be back tomorrow. This is a Lantern Podcast.