Luxury market surge driven by Chinese tourist lift

Isaac Mostovicz writes that evidence of a thriving luxury goods market continues with announcement of high profits from Burberry. ...

The high-end luxury market is booming, and emerging market tourists are to thank for this. I have written before about how consumers in emerging markets are helping the luxury market to recover from its worst slump in decades, and also how brands are eyeing up ways to attract Chinese shoppers online.

Now luxury fashion brand Burberry has announced that its annual profits will be at the top end of market expectations, thanks largely to Chinese tourists. The brand, which counts six UK stores as well as concessions in Selfridges, Harrods and Harvey Nichols, posted a 27 percent rise in third-quarter sales to $480 million. Of this, there was a 68 percent revenue growth from Asia Pacific, bringing in £150 million. Last September, the fashion house acquired 50 franchise stores in China, and wants to increase that to 100 over the next five years. In the UK, revenues were lifted by the flow of overseas tourists to London. While the Chinese were the biggest spenders in the Burberry UK shops, they were closely followed by visitors from Russia, the Middle East and Continental Europe. Burberry has a 155-year record of making raincoats and handbags, whose trademark camel, red and black check pattern is synonymous with the image of wealth, tradition and heritage.

Looking towards the future, things look bright. Chief Executive Angela Ahrendts said, “Ongoing initiatives in retail, digital, product development and new markets underpin our confidence in the future.” The brand has plans for a digital store format, that will be unveiled shortly, to attract its customers in China.

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