Apple and Burberry Ride Out Their China Successes as VF Regroups

Spread the love

Apple Inc

In the shadow of the pandemic, Apple’s eighth quarter proved to be a lucrative one. Total company sales in the three months ending December 25 surged by 11 percent to $124 billionyear-on-year, while Greater China outpaced the company’s average growth with a blistering rate of 21 percent.

Sales of $25.8 billion in Greater China mean that the region now accounts for 21 percent of all spending on Apple products globally, up from 19 percent during the same quarter a year ago — a number that has closed in on Europe’s (which did not achieve double -figure growth this quarter).

Apple shattered all-time revenue records across the board, with product segments from iPhones and Macs to wearables and services reaching new heights (although sales of iPads contracted). During an investor call, Apple CEO Tim Cook said the top four phones in terms of sales in urban China during the quarter came from the US tech giant. Consumers also responded well to the brand’s new launches, with the iPhone racking up sales of roughly $71.6 billion.

It was a similar positive story across every region except Japan, which declined by 14 percent.

In a statement, Cook said this quarter’s record results were due to “our most innovative line-up of products and services ever.” He acknowledged that the pandemic played its part, too, as more people have gone online to stay connected, shopand play despite recent gaming crackdowns in China.

Apple’s Q1 2022 announcement significantly boosted its stock at the end of January. But over the past month, its share price only rose by 2.4 percent. Across the past year, it has seen a massive gain of 30.5 percent.

VF Corp

There was a 6 percent sales contraction for VF Corporation in Greater China over the three months ending in December 2021. The outdoor/active apparel group, whose brands include Vans, The North Face, Timberland, and Dickies, struggled to cope with continuing macro disruptions in the wider Asia Pacific region over recent quarters.

VF Corp CEO Steven E. Rendle told analysts in an investor call: “Following its strong rebound in the first half of 2021, the Chinese economy has seen slowing growth… pressuring consumption in the back half. To mitigate these headwinds, we are maximizing new social commerce opportunities to offset lower traffic on certain digital platforms and to amplify key festival activations with targeted marketing stories and product drops.”

VF Corp has also moved its brand leadership teams to Shanghai, and they are now trying to make products more relevant to younger consumers while also testing emerging channels. CFO Matt Puckett said that, due to COVID-constrained travel and consumption, Chinese New Year would get impacted this year. Therefore, the company does not expect much more than low single-digit growth for China in fiscal 2022 (ending March), representing about 8 percent of VF Corp’s revenue over the full year.

Timberland’s Year of the Tiger capsule. Photo: Timberland’s Weibo

The Vans brand has had the hardest time in Greater China during Q3 2022 (down 26 percent). But this drop was offset somewhat by the resilience of The North Face (up 30 percent), which produced effective collabs.

Despite its issues in China, at the company level, VF Corp generated strong sales of $3.6 billion, up 22 percent, driven by EMEA and the Americas. Apart from an upward blip at the end of January due to its announcement, VF Corp’s earnings stock went down by 10.9 percent over the past month, tanking by 20 percent over the past year.

Burberry

Mainland China did well for British luxury house Burberry in the 13 weeks ending December 25, 2021. Comparable store sales grew by 15 percent, and full-price sales were up by 37 percent (in both cases, versus the same period two years ago) . Company efforts to minimize markdowns seem to be paying off.

In fact, Chinese growth was better than that of the overall company, with global sales up 5 percent to $980 million versus the same calendar quarter during 2020. Burberry chairman Gerry Murphy said in a statement: “Full-price sales continued to grow at a double-digit percentage compared with two years ago, reflecting a higher quality business.”

Burberry’s focus categories — outerwear and leather goods — also saw big, full-price gains of 38 and 29 percent, respectively, as they continued to target younger consumers. The company’s new store concept has also transformed brand perception, and there are now 31 units with this new design, including the flagship Plaza 66 in Shanghai.

On November 11, Burberry opened its new flagship store, co-created by the house and architect Vincenzo De Cotiis, at Plaza 66 in Shanghai. Photo: Burberry

Burberry has continued with some of its well-judged digital projects. It created an immersive traveling trench experience, inspired by the Trench Room in its social retail store in Shenzhen, before rolling it out to other locations on the Mainland. The company has also partnered with digital innovators through its outerwear activation on Jeju Island in South Korea.

Since mid-January, Burberry’s stock has seen a rebound, rising to new heights in 2022. And over the past month, its shares went up by 10.9 percent, continuing a similar trend over the year (up 9.6 percent in total).

Laisser un commentaire

Votre adresse e-mail ne sera pas publiée.